0001823239
2024
FY
FALSE
P1Y
http://fasb.org/us-gaap/2024#PropertyPlantAndEquipmentAndFinanceLeaseRightOfUseAssetAfterAccumulatedDepreciationAndAmortization
http://fasb.org/us-gaap/2024#PropertyPlantAndEquipmentAndFinanceLeaseRightOfUseAssetAfterAccumulatedDepreciationAndAmortization
http://fasb.org/us-gaap/2024#OtherAssetsNoncurrent
http://fasb.org/us-gaap/2024#OtherAssetsNoncurrent
http://fasb.org/us-gaap/2024#AccruedLiabilitiesCurrent
http://fasb.org/us-gaap/2024#AccruedLiabilitiesCurrent
http://fasb.org/us-gaap/2024#OtherLiabilitiesNoncurrent
http://fasb.org/us-gaap/2024#OtherLiabilitiesNoncurrent
iso4217:USD
xbrli:shares
iso4217:USD
xbrli:shares
mrvi:segment
xbrli:pure
mrvi:employee
mrvi:reporting_unit
mrvi:payment
mrvi:building
mrvi:vote
0001823239
2024-01-01
2024-12-31
0001823239
2024-06-28
0001823239
us-gaap:CommonClassAMember
2025-03-11
0001823239
us-gaap:CommonClassBMember
2025-03-11
0001823239
2024-12-31
0001823239
2023-12-31
0001823239
us-gaap:NonrelatedPartyMember
2024-12-31
0001823239
us-gaap:NonrelatedPartyMember
2023-12-31
0001823239
us-gaap:RelatedPartyMember
2024-12-31
0001823239
us-gaap:RelatedPartyMember
2023-12-31
0001823239
us-gaap:CommonClassAMember
2024-12-31
0001823239
us-gaap:CommonClassAMember
2023-12-31
0001823239
us-gaap:CommonClassBMember
2023-12-31
0001823239
us-gaap:CommonClassBMember
2024-12-31
0001823239
2023-01-01
2023-12-31
0001823239
2022-01-01
2022-12-31
0001823239
us-gaap:CommonStockMember
us-gaap:CommonClassAMember
2021-12-31
0001823239
us-gaap:CommonStockMember
us-gaap:CommonClassBMember
2021-12-31
0001823239
us-gaap:AdditionalPaidInCapitalMember
2021-12-31
0001823239
us-gaap:RetainedEarningsMember
2021-12-31
0001823239
us-gaap:NoncontrollingInterestMember
2021-12-31
0001823239
2021-12-31
0001823239
us-gaap:CommonStockMember
us-gaap:CommonClassAMember
2022-01-01
2022-12-31
0001823239
us-gaap:AdditionalPaidInCapitalMember
2022-01-01
2022-12-31
0001823239
us-gaap:NoncontrollingInterestMember
2022-01-01
2022-12-31
0001823239
us-gaap:RetainedEarningsMember
2022-01-01
2022-12-31
0001823239
us-gaap:CommonStockMember
us-gaap:CommonClassAMember
2022-12-31
0001823239
us-gaap:CommonStockMember
us-gaap:CommonClassBMember
2022-12-31
0001823239
us-gaap:AdditionalPaidInCapitalMember
2022-12-31
0001823239
us-gaap:RetainedEarningsMember
2022-12-31
0001823239
us-gaap:NoncontrollingInterestMember
2022-12-31
0001823239
2022-12-31
0001823239
us-gaap:CommonStockMember
us-gaap:CommonClassBMember
2023-01-01
2023-12-31
0001823239
us-gaap:AdditionalPaidInCapitalMember
2023-01-01
2023-12-31
0001823239
us-gaap:NoncontrollingInterestMember
2023-01-01
2023-12-31
0001823239
us-gaap:CommonStockMember
us-gaap:CommonClassAMember
2023-01-01
2023-12-31
0001823239
us-gaap:RetainedEarningsMember
2023-01-01
2023-12-31
0001823239
us-gaap:CommonStockMember
us-gaap:CommonClassAMember
2023-12-31
0001823239
us-gaap:CommonStockMember
us-gaap:CommonClassBMember
2023-12-31
0001823239
us-gaap:AdditionalPaidInCapitalMember
2023-12-31
0001823239
us-gaap:RetainedEarningsMember
2023-12-31
0001823239
us-gaap:NoncontrollingInterestMember
2023-12-31
0001823239
us-gaap:CommonStockMember
us-gaap:CommonClassAMember
2024-01-01
2024-12-31
0001823239
us-gaap:CommonStockMember
us-gaap:CommonClassBMember
2024-01-01
2024-12-31
0001823239
us-gaap:AdditionalPaidInCapitalMember
2024-01-01
2024-12-31
0001823239
us-gaap:NoncontrollingInterestMember
2024-01-01
2024-12-31
0001823239
us-gaap:RetainedEarningsMember
2024-01-01
2024-12-31
0001823239
us-gaap:CommonStockMember
us-gaap:CommonClassAMember
2024-12-31
0001823239
us-gaap:CommonStockMember
us-gaap:CommonClassBMember
2024-12-31
0001823239
us-gaap:AdditionalPaidInCapitalMember
2024-12-31
0001823239
us-gaap:RetainedEarningsMember
2024-12-31
0001823239
us-gaap:NoncontrollingInterestMember
2024-12-31
0001823239
mrvi:MaravaiLifeSciencesHoldingsLLCMember
2024-01-01
2024-12-31
0001823239
mrvi:MaravaiLifeSciencesHoldingsLLCMember
2023-01-01
2023-12-31
0001823239
mrvi:MaravaiLifeSciencesHoldingsLLCMember
2022-01-01
2022-12-31
0001823239
mrvi:MaravaiLifeSciencesHoldings2LLCMember
2024-01-01
2024-12-31
0001823239
mrvi:MaravaiLifeSciencesHoldings2LLCMember
2023-01-01
2023-12-31
0001823239
mrvi:MaravaiLifeSciencesHoldings2LLCMember
2022-01-01
2022-12-31
0001823239
srt:NorthAmericaMember
mrvi:NucleicAcidProductionSegmentMember
2024-01-01
2024-12-31
0001823239
srt:NorthAmericaMember
mrvi:BiologicsSafetyTestingSegmentMember
2024-01-01
2024-12-31
0001823239
srt:NorthAmericaMember
2024-01-01
2024-12-31
0001823239
us-gaap:EMEAMember
mrvi:NucleicAcidProductionSegmentMember
2024-01-01
2024-12-31
0001823239
us-gaap:EMEAMember
mrvi:BiologicsSafetyTestingSegmentMember
2024-01-01
2024-12-31
0001823239
us-gaap:EMEAMember
2024-01-01
2024-12-31
0001823239
srt:AsiaPacificMember
mrvi:NucleicAcidProductionSegmentMember
2024-01-01
2024-12-31
0001823239
srt:AsiaPacificMember
mrvi:BiologicsSafetyTestingSegmentMember
2024-01-01
2024-12-31
0001823239
srt:AsiaPacificMember
2024-01-01
2024-12-31
0001823239
mrvi:LatinAndCentralAmericaMember
mrvi:NucleicAcidProductionSegmentMember
2024-01-01
2024-12-31
0001823239
mrvi:LatinAndCentralAmericaMember
mrvi:BiologicsSafetyTestingSegmentMember
2024-01-01
2024-12-31
0001823239
mrvi:LatinAndCentralAmericaMember
2024-01-01
2024-12-31
0001823239
mrvi:NucleicAcidProductionSegmentMember
2024-01-01
2024-12-31
0001823239
mrvi:BiologicsSafetyTestingSegmentMember
2024-01-01
2024-12-31
0001823239
srt:NorthAmericaMember
mrvi:NucleicAcidProductionSegmentMember
2023-01-01
2023-12-31
0001823239
srt:NorthAmericaMember
mrvi:BiologicsSafetyTestingSegmentMember
2023-01-01
2023-12-31
0001823239
srt:NorthAmericaMember
2023-01-01
2023-12-31
0001823239
us-gaap:EMEAMember
mrvi:NucleicAcidProductionSegmentMember
2023-01-01
2023-12-31
0001823239
us-gaap:EMEAMember
mrvi:BiologicsSafetyTestingSegmentMember
2023-01-01
2023-12-31
0001823239
us-gaap:EMEAMember
2023-01-01
2023-12-31
0001823239
srt:AsiaPacificMember
mrvi:NucleicAcidProductionSegmentMember
2023-01-01
2023-12-31
0001823239
srt:AsiaPacificMember
mrvi:BiologicsSafetyTestingSegmentMember
2023-01-01
2023-12-31
0001823239
srt:AsiaPacificMember
2023-01-01
2023-12-31
0001823239
mrvi:LatinAndCentralAmericaMember
mrvi:NucleicAcidProductionSegmentMember
2023-01-01
2023-12-31
0001823239
mrvi:LatinAndCentralAmericaMember
mrvi:BiologicsSafetyTestingSegmentMember
2023-01-01
2023-12-31
0001823239
mrvi:LatinAndCentralAmericaMember
2023-01-01
2023-12-31
0001823239
mrvi:NucleicAcidProductionSegmentMember
2023-01-01
2023-12-31
0001823239
mrvi:BiologicsSafetyTestingSegmentMember
2023-01-01
2023-12-31
0001823239
srt:NorthAmericaMember
mrvi:NucleicAcidProductionSegmentMember
2022-01-01
2022-12-31
0001823239
srt:NorthAmericaMember
mrvi:BiologicsSafetyTestingSegmentMember
2022-01-01
2022-12-31
0001823239
srt:NorthAmericaMember
2022-01-01
2022-12-31
0001823239
us-gaap:EMEAMember
mrvi:NucleicAcidProductionSegmentMember
2022-01-01
2022-12-31
0001823239
us-gaap:EMEAMember
mrvi:BiologicsSafetyTestingSegmentMember
2022-01-01
2022-12-31
0001823239
us-gaap:EMEAMember
2022-01-01
2022-12-31
0001823239
srt:AsiaPacificMember
mrvi:NucleicAcidProductionSegmentMember
2022-01-01
2022-12-31
0001823239
srt:AsiaPacificMember
mrvi:BiologicsSafetyTestingSegmentMember
2022-01-01
2022-12-31
0001823239
srt:AsiaPacificMember
2022-01-01
2022-12-31
0001823239
mrvi:LatinAndCentralAmericaMember
mrvi:NucleicAcidProductionSegmentMember
2022-01-01
2022-12-31
0001823239
mrvi:LatinAndCentralAmericaMember
mrvi:BiologicsSafetyTestingSegmentMember
2022-01-01
2022-12-31
0001823239
mrvi:LatinAndCentralAmericaMember
2022-01-01
2022-12-31
0001823239
mrvi:NucleicAcidProductionSegmentMember
2022-01-01
2022-12-31
0001823239
mrvi:BiologicsSafetyTestingSegmentMember
2022-01-01
2022-12-31
0001823239
us-gaap:ShippingAndHandlingMember
2024-01-01
2024-12-31
0001823239
us-gaap:ShippingAndHandlingMember
2023-01-01
2023-12-31
0001823239
us-gaap:ShippingAndHandlingMember
2022-01-01
2022-12-31
0001823239
srt:MinimumMember
2024-01-01
2024-12-31
0001823239
srt:MaximumMember
2024-01-01
2024-12-31
0001823239
mrvi:MaravaiTopcoHoldingsLLCMember
2024-12-31
0001823239
mrvi:MaravaiTopcoHoldingsLLCMember
mrvi:MaravaiLifeSciencesHoldingsLLCMember
2024-12-31
0001823239
mrvi:TaxDistributionMember
mrvi:MaravaiTopcoHoldingsLLCMember
mrvi:MaravaiLifeSciencesHoldingsLLCMember
2024-01-01
2024-12-31
0001823239
mrvi:TaxDistributionMember
mrvi:MaravaiTopcoHoldingsLLCMember
mrvi:MaravaiLifeSciencesHoldingsLLCMember
2023-01-01
2023-12-31
0001823239
mrvi:TaxDistributionMember
mrvi:MaravaiTopcoHoldingsLLCMember
mrvi:MaravaiLifeSciencesHoldingsLLCMember
2022-01-01
2022-12-31
0001823239
us-gaap:LeaseholdImprovementsMember
2024-12-31
0001823239
srt:MinimumMember
us-gaap:FurnitureAndFixturesMember
2024-12-31
0001823239
srt:MaximumMember
us-gaap:FurnitureAndFixturesMember
2024-12-31
0001823239
2024-07-01
2024-12-31
0001823239
mrvi:NacalaiUSAIncMember
us-gaap:CustomerConcentrationRiskMember
us-gaap:RevenueFromContractWithCustomerMember
2024-01-01
2024-12-31
0001823239
mrvi:NacalaiUSAIncMember
us-gaap:CustomerConcentrationRiskMember
us-gaap:RevenueFromContractWithCustomerMember
2023-01-01
2023-12-31
0001823239
mrvi:NacalaiUSAIncMember
us-gaap:CustomerConcentrationRiskMember
mrvi:AccountsReceivableBenchmarkMember
2024-01-01
2024-12-31
0001823239
mrvi:NacalaiUSAIncMember
us-gaap:CustomerConcentrationRiskMember
mrvi:AccountsReceivableBenchmarkMember
2023-01-01
2023-12-31
0001823239
mrvi:CureVacMember
us-gaap:CustomerConcentrationRiskMember
mrvi:AccountsReceivableBenchmarkMember
2023-01-01
2023-12-31
0001823239
mrvi:BioNTechSEMember
us-gaap:CustomerConcentrationRiskMember
us-gaap:RevenueFromContractWithCustomerMember
2022-01-01
2022-12-31
0001823239
mrvi:PfizerIncMember
us-gaap:CustomerConcentrationRiskMember
us-gaap:RevenueFromContractWithCustomerMember
2022-01-01
2022-12-31
0001823239
mrvi:AlphazymeLLCMember
2023-01-18
2023-01-18
0001823239
mrvi:AlphazymeLLCMember
2023-01-01
2023-12-31
0001823239
mrvi:AlphazymeLLCMember
2023-01-18
2023-06-30
0001823239
mrvi:AlphazymeLLCMember
2023-06-01
2023-06-30
0001823239
mrvi:AlphazymeLLCMember
mrvi:SecuritiesPurchaseAgreementMaximumPerformancePaymentMember
2023-01-18
0001823239
mrvi:AlphazymeLLCMember
2024-01-01
2024-12-31
0001823239
mrvi:AlphazymeLLCMember
mrvi:SecuritiesPurchaseAgreementMaximumPerformancePaymentMember
2024-12-31
0001823239
mrvi:AlphazymeLLCMember
mrvi:SecuritiesPurchaseAgreementPerformancePaymentMember
2024-12-31
0001823239
mrvi:SecuritiesPurchaseAgreementRetentionPaymentMember
2023-01-18
0001823239
mrvi:AlphazymeLLCMember
mrvi:SecuritiesPurchaseAgreementRetentionPaymentMember
mrvi:MyChemLegacyOwnersMember
2023-01-18
2023-01-18
0001823239
mrvi:AlphazymeLLCMember
mrvi:SecuritiesPurchaseAgreementRetentionPaymentMember
us-gaap:OtherNoncurrentLiabilitiesMember
mrvi:MyChemLegacyOwnersMember
2024-12-31
0001823239
mrvi:AlphazymeLLCMember
mrvi:SecuritiesPurchaseAgreementRetentionPaymentMember
us-gaap:CostOfSalesMember
mrvi:MyChemLegacyOwnersMember
2024-01-01
2024-12-31
0001823239
mrvi:AlphazymeLLCMember
mrvi:SecuritiesPurchaseAgreementRetentionPaymentMember
us-gaap:SellingGeneralAndAdministrativeExpensesMember
mrvi:MyChemLegacyOwnersMember
2023-01-01
2023-12-31
0001823239
mrvi:AlphazymeLLCMember
mrvi:SecuritiesPurchaseAgreementRetentionPaymentMember
us-gaap:SellingGeneralAndAdministrativeExpensesMember
mrvi:MyChemLegacyOwnersMember
2024-01-01
2024-12-31
0001823239
mrvi:AlphazymeLLCMember
2023-01-18
0001823239
mrvi:AlphazymeLLCMember
2023-07-01
2023-09-30
0001823239
mrvi:AlphazymeLLCMember
mrvi:PotentialWorkingCapitalAdjustmentsMember
2023-01-18
0001823239
mrvi:AlphazymeLLCMember
mrvi:SecureRepresentationsAndWarrantiesMember
2023-01-18
0001823239
mrvi:AlphazymeLLCMember
mrvi:PotentialWorkingCapitalAdjustmentsMember
2023-04-01
2023-06-30
0001823239
mrvi:AlphazymeLLCMember
2023-04-01
2023-06-30
0001823239
mrvi:AlphazymeLLCMember
mrvi:SecureRepresentationsAndWarrantiesMember
2024-01-01
2024-03-31
0001823239
mrvi:AlphazymeLLCMember
us-gaap:TradeNamesMember
2023-01-18
0001823239
mrvi:AlphazymeLLCMember
us-gaap:TradeNamesMember
2023-01-18
2023-01-18
0001823239
mrvi:AlphazymeLLCMember
us-gaap:DevelopedTechnologyRightsMember
2023-01-18
0001823239
mrvi:AlphazymeLLCMember
us-gaap:DevelopedTechnologyRightsMember
2023-01-18
2023-01-18
0001823239
mrvi:AlphazymeLLCMember
us-gaap:CustomerRelationshipsMember
2023-01-18
0001823239
mrvi:AlphazymeLLCMember
us-gaap:CustomerRelationshipsMember
2023-01-18
2023-01-18
0001823239
mrvi:AlphazymeLLCMember
mrvi:MeasurementInputRevenueGrowthRateMember
us-gaap:ValuationTechniqueDiscountedCashFlowMember
srt:MinimumMember
2023-01-18
0001823239
mrvi:AlphazymeLLCMember
mrvi:MeasurementInputRevenueGrowthRateMember
us-gaap:ValuationTechniqueDiscountedCashFlowMember
srt:MaximumMember
2023-01-18
0001823239
mrvi:AlphazymeLLCMember
us-gaap:MeasurementInputDiscountRateMember
us-gaap:ValuationTechniqueDiscountedCashFlowMember
2023-01-18
0001823239
mrvi:AlphazymeLLCMember
mrvi:MeasurementInputObsolescentCurveMember
us-gaap:ValuationTechniqueDiscountedCashFlowMember
2023-01-18
0001823239
mrvi:MyChemLLCMember
2022-01-27
2022-01-27
0001823239
mrvi:MyChemLLCMember
2022-01-01
2022-12-31
0001823239
mrvi:MyChemLLCMember
2022-01-27
2022-11-30
0001823239
mrvi:MyChemLLCMember
2022-11-01
2022-11-30
0001823239
mrvi:MyChemLLCMember
mrvi:SecuritiesPurchaseAgreementMaximumPerformancePaymentMember
2022-01-27
0001823239
mrvi:MyChemLLCMember
mrvi:SecuritiesPurchaseAgreementMaximumPerformancePaymentMember
2022-01-01
2022-12-31
0001823239
mrvi:MyChemLLCMember
mrvi:SecuritiesPurchaseAgreementRetentionPaymentMember
2022-01-27
0001823239
mrvi:MyChemLLCMember
mrvi:MyChemLegacyOwnersMember
2022-01-27
2022-01-27
0001823239
mrvi:MyChemLLCMember
mrvi:SecuritiesPurchaseAgreementRetentionPaymentMember
us-gaap:CostOfSalesMember
mrvi:MyChemLegacyOwnersMember
2024-01-01
2024-12-31
0001823239
mrvi:MyChemLLCMember
mrvi:SecuritiesPurchaseAgreementRetentionPaymentMember
us-gaap:CostOfSalesMember
mrvi:MyChemLegacyOwnersMember
2023-01-01
2023-12-31
0001823239
mrvi:MyChemLLCMember
mrvi:SecuritiesPurchaseAgreementRetentionPaymentMember
us-gaap:CostOfSalesMember
mrvi:MyChemLegacyOwnersMember
2022-01-01
2022-12-31
0001823239
mrvi:MyChemLLCMember
mrvi:SecuritiesPurchaseAgreementRetentionPaymentMember
us-gaap:ResearchAndDevelopmentExpenseMember
mrvi:MyChemLegacyOwnersMember
2024-01-01
2024-12-31
0001823239
mrvi:MyChemLLCMember
mrvi:SecuritiesPurchaseAgreementRetentionPaymentMember
us-gaap:ResearchAndDevelopmentExpenseMember
mrvi:MyChemLegacyOwnersMember
2023-01-01
2023-12-31
0001823239
mrvi:MyChemLLCMember
mrvi:SecuritiesPurchaseAgreementRetentionPaymentMember
us-gaap:ResearchAndDevelopmentExpenseMember
mrvi:MyChemLegacyOwnersMember
2022-01-01
2022-12-31
0001823239
mrvi:MyChemLLCMember
mrvi:SecuritiesPurchaseAgreementCompletionOfAcquiredInventoryMember
2022-12-31
0001823239
mrvi:MyChemLLCMember
mrvi:SecuritiesPurchaseAgreementCompletionOfAcquiredInventoryMember
2023-01-28
2023-03-31
0001823239
mrvi:MyChemLLCMember
mrvi:SecuritiesPurchaseAgreementCompletionOfAcquiredInventoryMember
2023-04-01
2023-12-31
0001823239
mrvi:MyChemLLCMember
2022-01-27
0001823239
mrvi:MyChemLLCMember
2022-10-01
2022-12-31
0001823239
mrvi:MyChemLLCMember
mrvi:PotentialWorkingCapitalAdjustmentsMember
2022-01-27
0001823239
mrvi:MyChemLLCMember
mrvi:SecureRepresentationsAndWarrantiesMember
2022-01-27
0001823239
mrvi:MyChemLLCMember
mrvi:PotentialWorkingCapitalAdjustmentsMember
2022-10-01
2022-12-31
0001823239
mrvi:MyChemLLCMember
mrvi:SecureRepresentationsAndWarrantiesMember
2023-01-28
2023-03-31
0001823239
mrvi:MyChemLLCMember
mrvi:IndemnificationOfPreClosingLiabilitiesMember
2023-01-28
2023-03-31
0001823239
mrvi:MyChemLLCMember
us-gaap:TradeNamesMember
2022-01-27
0001823239
mrvi:MyChemLLCMember
us-gaap:TradeNamesMember
2022-01-27
2022-01-27
0001823239
mrvi:MyChemLLCMember
us-gaap:DevelopedTechnologyRightsMember
2022-01-27
0001823239
mrvi:MyChemLLCMember
us-gaap:DevelopedTechnologyRightsMember
2022-01-27
2022-01-27
0001823239
mrvi:MyChemLLCMember
us-gaap:CustomerRelationshipsMember
2022-01-27
0001823239
mrvi:MyChemLLCMember
us-gaap:CustomerRelationshipsMember
2022-01-27
2022-01-27
0001823239
mrvi:MyChemLLCMember
mrvi:MeasurementInputRevenueGrowthRateMember
us-gaap:ValuationTechniqueDiscountedCashFlowMember
srt:MinimumMember
2022-01-27
0001823239
mrvi:MyChemLLCMember
mrvi:MeasurementInputRevenueGrowthRateMember
us-gaap:ValuationTechniqueDiscountedCashFlowMember
srt:MaximumMember
2022-01-27
0001823239
mrvi:MyChemLLCMember
us-gaap:MeasurementInputDiscountRateMember
us-gaap:ValuationTechniqueDiscountedCashFlowMember
2022-01-27
0001823239
mrvi:MyChemLLCMember
mrvi:MeasurementInputObsolescentCurveMember
us-gaap:ValuationTechniqueDiscountedCashFlowMember
srt:MinimumMember
2022-01-27
0001823239
mrvi:MyChemLLCMember
mrvi:MeasurementInputObsolescentCurveMember
us-gaap:ValuationTechniqueDiscountedCashFlowMember
srt:MaximumMember
2022-01-27
0001823239
mrvi:MyChemLLCMember
2024-12-31
0001823239
mrvi:CostRealignmentPlanMember
2023-11-01
2023-11-30
0001823239
mrvi:CostRealignmentPlanMember
mrvi:NucleicAcidProductionSegmentMember
2024-01-01
2024-12-31
0001823239
mrvi:CostRealignmentPlanMember
us-gaap:CorporateMember
2024-01-01
2024-12-31
0001823239
mrvi:CostRealignmentPlanMember
2024-01-01
2024-12-31
0001823239
mrvi:CostRealignmentPlanMember
mrvi:NucleicAcidProductionSegmentMember
2023-01-01
2023-12-31
0001823239
mrvi:CostRealignmentPlanMember
us-gaap:CorporateMember
2023-01-01
2023-12-31
0001823239
mrvi:CostRealignmentPlanMember
2023-01-01
2023-12-31
0001823239
us-gaap:EmployeeSeveranceMember
mrvi:CostRealignmentPlanMember
2022-12-31
0001823239
mrvi:StockBasedCompensationExpenseBenefitMember
mrvi:CostRealignmentPlanMember
2022-12-31
0001823239
us-gaap:FacilityClosingMember
mrvi:CostRealignmentPlanMember
2022-12-31
0001823239
us-gaap:OtherRestructuringMember
mrvi:CostRealignmentPlanMember
2022-12-31
0001823239
mrvi:CostRealignmentPlanMember
2022-12-31
0001823239
us-gaap:EmployeeSeveranceMember
mrvi:CostRealignmentPlanMember
2023-01-01
2023-12-31
0001823239
mrvi:StockBasedCompensationExpenseBenefitMember
mrvi:CostRealignmentPlanMember
2023-01-01
2023-12-31
0001823239
us-gaap:FacilityClosingMember
mrvi:CostRealignmentPlanMember
2023-01-01
2023-12-31
0001823239
us-gaap:OtherRestructuringMember
mrvi:CostRealignmentPlanMember
2023-01-01
2023-12-31
0001823239
us-gaap:EmployeeSeveranceMember
mrvi:CostRealignmentPlanMember
2023-12-31
0001823239
mrvi:StockBasedCompensationExpenseBenefitMember
mrvi:CostRealignmentPlanMember
2023-12-31
0001823239
us-gaap:FacilityClosingMember
mrvi:CostRealignmentPlanMember
2023-12-31
0001823239
us-gaap:OtherRestructuringMember
mrvi:CostRealignmentPlanMember
2023-12-31
0001823239
mrvi:CostRealignmentPlanMember
2023-12-31
0001823239
us-gaap:EmployeeSeveranceMember
mrvi:CostRealignmentPlanMember
2024-01-01
2024-12-31
0001823239
mrvi:StockBasedCompensationExpenseBenefitMember
mrvi:CostRealignmentPlanMember
2024-01-01
2024-12-31
0001823239
us-gaap:FacilityClosingMember
mrvi:CostRealignmentPlanMember
2024-01-01
2024-12-31
0001823239
us-gaap:OtherRestructuringMember
mrvi:CostRealignmentPlanMember
2024-01-01
2024-12-31
0001823239
us-gaap:EmployeeSeveranceMember
mrvi:CostRealignmentPlanMember
2024-12-31
0001823239
mrvi:StockBasedCompensationExpenseBenefitMember
mrvi:CostRealignmentPlanMember
2024-12-31
0001823239
us-gaap:FacilityClosingMember
mrvi:CostRealignmentPlanMember
2024-12-31
0001823239
us-gaap:OtherRestructuringMember
mrvi:CostRealignmentPlanMember
2024-12-31
0001823239
mrvi:CostRealignmentPlanMember
2024-12-31
0001823239
mrvi:NucleicAcidProductionSegmentMember
2023-12-31
0001823239
mrvi:BiologicsSafetyTestingSegmentMember
2023-12-31
0001823239
mrvi:NucleicAcidProductionSegmentMember
2024-12-31
0001823239
mrvi:BiologicsSafetyTestingSegmentMember
2024-12-31
0001823239
mrvi:TriLinkMember
mrvi:NucleicAcidProductionSegmentMember
2024-01-01
2024-12-31
0001823239
mrvi:AlphazymeLLCMember
mrvi:NucleicAcidProductionSegmentMember
2024-01-01
2024-12-31
0001823239
mrvi:TriLinkMember
mrvi:NucleicAcidProductionSegmentMember
2024-12-31
0001823239
mrvi:UnimpairedReportingUnitsMember
mrvi:NucleicAcidProductionSegmentMember
2024-07-01
2024-09-30
0001823239
mrvi:AlphazymeLLCMember
mrvi:NucleicAcidProductionSegmentMember
2024-12-31
0001823239
mrvi:UnimpairedReportingUnitsMember
mrvi:NucleicAcidProductionSegmentMember
2024-10-01
2024-12-31
0001823239
srt:MinimumMember
2024-12-31
0001823239
srt:MaximumMember
2024-12-31
0001823239
us-gaap:TradeNamesMember
2024-12-31
0001823239
us-gaap:TradeNamesMember
srt:MinimumMember
2024-12-31
0001823239
us-gaap:TradeNamesMember
srt:MaximumMember
2024-12-31
0001823239
us-gaap:TechnologyBasedIntangibleAssetsMember
2024-12-31
0001823239
us-gaap:TechnologyBasedIntangibleAssetsMember
srt:MinimumMember
2024-12-31
0001823239
us-gaap:TechnologyBasedIntangibleAssetsMember
srt:MaximumMember
2024-12-31
0001823239
us-gaap:CustomerRelationshipsMember
2024-12-31
0001823239
us-gaap:CustomerRelationshipsMember
srt:MinimumMember
2024-12-31
0001823239
us-gaap:CustomerRelationshipsMember
srt:MaximumMember
2024-12-31
0001823239
us-gaap:TradeNamesMember
2023-12-31
0001823239
us-gaap:TradeNamesMember
srt:MinimumMember
2023-12-31
0001823239
us-gaap:TradeNamesMember
srt:MaximumMember
2023-12-31
0001823239
us-gaap:TechnologyBasedIntangibleAssetsMember
2023-12-31
0001823239
us-gaap:TechnologyBasedIntangibleAssetsMember
srt:MinimumMember
2023-12-31
0001823239
us-gaap:TechnologyBasedIntangibleAssetsMember
srt:MaximumMember
2023-12-31
0001823239
us-gaap:CustomerRelationshipsMember
2023-12-31
0001823239
us-gaap:CustomerRelationshipsMember
srt:MinimumMember
2023-12-31
0001823239
us-gaap:CustomerRelationshipsMember
srt:MaximumMember
2023-12-31
0001823239
us-gaap:CostOfSalesMember
2024-01-01
2024-12-31
0001823239
us-gaap:CostOfSalesMember
2023-01-01
2023-12-31
0001823239
us-gaap:CostOfSalesMember
2022-01-01
2022-12-31
0001823239
us-gaap:SellingGeneralAndAdministrativeExpensesMember
2024-01-01
2024-12-31
0001823239
us-gaap:SellingGeneralAndAdministrativeExpensesMember
2023-01-01
2023-12-31
0001823239
us-gaap:SellingGeneralAndAdministrativeExpensesMember
2022-01-01
2022-12-31
0001823239
us-gaap:FairValueInputsLevel1Member
us-gaap:FairValueMeasurementsRecurringMember
us-gaap:MoneyMarketFundsMember
2024-12-31
0001823239
us-gaap:FairValueInputsLevel2Member
us-gaap:FairValueMeasurementsRecurringMember
us-gaap:MoneyMarketFundsMember
2024-12-31
0001823239
us-gaap:FairValueInputsLevel3Member
us-gaap:FairValueMeasurementsRecurringMember
us-gaap:MoneyMarketFundsMember
2024-12-31
0001823239
us-gaap:FairValueMeasurementsRecurringMember
us-gaap:MoneyMarketFundsMember
2024-12-31
0001823239
us-gaap:FairValueInputsLevel1Member
us-gaap:FairValueMeasurementsRecurringMember
us-gaap:InterestRateCapMember
2024-12-31
0001823239
us-gaap:FairValueInputsLevel2Member
us-gaap:FairValueMeasurementsRecurringMember
us-gaap:InterestRateCapMember
2024-12-31
0001823239
us-gaap:FairValueInputsLevel3Member
us-gaap:FairValueMeasurementsRecurringMember
us-gaap:InterestRateCapMember
2024-12-31
0001823239
us-gaap:FairValueMeasurementsRecurringMember
us-gaap:InterestRateCapMember
2024-12-31
0001823239
us-gaap:FairValueInputsLevel1Member
us-gaap:FairValueMeasurementsRecurringMember
2024-12-31
0001823239
us-gaap:FairValueInputsLevel2Member
us-gaap:FairValueMeasurementsRecurringMember
2024-12-31
0001823239
us-gaap:FairValueInputsLevel3Member
us-gaap:FairValueMeasurementsRecurringMember
2024-12-31
0001823239
us-gaap:FairValueMeasurementsRecurringMember
2024-12-31
0001823239
us-gaap:FairValueInputsLevel1Member
us-gaap:FairValueMeasurementsRecurringMember
us-gaap:MoneyMarketFundsMember
2023-12-31
0001823239
us-gaap:FairValueInputsLevel2Member
us-gaap:FairValueMeasurementsRecurringMember
us-gaap:MoneyMarketFundsMember
2023-12-31
0001823239
us-gaap:FairValueInputsLevel3Member
us-gaap:FairValueMeasurementsRecurringMember
us-gaap:MoneyMarketFundsMember
2023-12-31
0001823239
us-gaap:FairValueMeasurementsRecurringMember
us-gaap:MoneyMarketFundsMember
2023-12-31
0001823239
us-gaap:FairValueInputsLevel1Member
us-gaap:FairValueMeasurementsRecurringMember
us-gaap:InterestRateCapMember
2023-12-31
0001823239
us-gaap:FairValueInputsLevel2Member
us-gaap:FairValueMeasurementsRecurringMember
us-gaap:InterestRateCapMember
2023-12-31
0001823239
us-gaap:FairValueInputsLevel3Member
us-gaap:FairValueMeasurementsRecurringMember
us-gaap:InterestRateCapMember
2023-12-31
0001823239
us-gaap:FairValueMeasurementsRecurringMember
us-gaap:InterestRateCapMember
2023-12-31
0001823239
us-gaap:FairValueInputsLevel1Member
us-gaap:FairValueMeasurementsRecurringMember
2023-12-31
0001823239
us-gaap:FairValueInputsLevel2Member
us-gaap:FairValueMeasurementsRecurringMember
2023-12-31
0001823239
us-gaap:FairValueInputsLevel3Member
us-gaap:FairValueMeasurementsRecurringMember
2023-12-31
0001823239
us-gaap:FairValueMeasurementsRecurringMember
2023-12-31
0001823239
mrvi:AlphazymeLLCMember
mrvi:SecuritiesPurchaseAgreementMaximumPerformancePaymentMember
2023-01-31
0001823239
mrvi:AlphazymeLLCMember
2023-01-01
2023-01-31
0001823239
mrvi:AlphazymeLLCMember
us-gaap:MeasurementInputDiscountRateMember
2023-01-31
0001823239
mrvi:AlphazymeLLCMember
2023-01-31
0001823239
us-gaap:LeaseholdImprovementsMember
2023-12-31
0001823239
us-gaap:FurnitureAndFixturesMember
2024-12-31
0001823239
us-gaap:FurnitureAndFixturesMember
2023-12-31
0001823239
us-gaap:SoftwareDevelopmentMember
2024-12-31
0001823239
us-gaap:SoftwareDevelopmentMember
2023-12-31
0001823239
mrvi:DepreciablePropertyPlantAndEquipmentMember
2024-12-31
0001823239
mrvi:DepreciablePropertyPlantAndEquipmentMember
2023-12-31
0001823239
us-gaap:ConstructionInProgressMember
2024-12-31
0001823239
us-gaap:ConstructionInProgressMember
2023-12-31
0001823239
mrvi:MyChemLLCMember
2023-12-31
0001823239
mrvi:AlphazymeLLCMember
2024-12-31
0001823239
mrvi:AlphazymeLLCMember
2023-12-31
0001823239
mrvi:SanDiegoCaliforniaMember
2022-05-31
0001823239
mrvi:CooperativeAgreementMember
2022-05-01
2022-05-31
0001823239
mrvi:CooperativeAgreementMember
2022-05-31
0001823239
mrvi:CooperativeAgreementMember
2024-01-01
2024-12-31
0001823239
mrvi:CooperativeAgreementMember
2023-01-01
2023-12-31
0001823239
mrvi:CooperativeAgreementMember
2024-12-31
0001823239
mrvi:CooperativeAgreementMember
2023-12-31
0001823239
mrvi:NewCreditAgreementMember
us-gaap:LetterOfCreditMember
us-gaap:LineOfCreditMember
2024-12-31
0001823239
mrvi:NewCreditAgreementMember
us-gaap:SecuredDebtMember
us-gaap:LineOfCreditMember
2020-10-31
0001823239
mrvi:NewCreditAgreementMember
us-gaap:RevolvingCreditFacilityMember
us-gaap:LineOfCreditMember
2020-10-31
0001823239
mrvi:NewCreditAgreementMember
us-gaap:SecuredDebtMember
us-gaap:LineOfCreditMember
2024-12-31
0001823239
mrvi:NewCreditAgreementMember
us-gaap:LetterOfCreditMember
us-gaap:LineOfCreditMember
2022-01-31
0001823239
mrvi:NewCreditAgreementMember
2022-01-01
2022-12-31
0001823239
mrvi:NewCreditAgreementMember
us-gaap:SecuredDebtMember
us-gaap:LineOfCreditMember
2022-01-31
0001823239
mrvi:NewCreditAgreementMember
2024-01-01
2024-12-31
0001823239
mrvi:NewCreditAgreementMember
2024-09-30
0001823239
mrvi:NewCreditAgreementMember
us-gaap:RevolvingCreditFacilityMember
us-gaap:LineOfCreditMember
2024-12-31
0001823239
mrvi:NewCreditAgreementMember
us-gaap:SecuredDebtMember
us-gaap:LineOfCreditMember
2022-03-01
2022-03-31
0001823239
mrvi:NewCreditAgreementMember
us-gaap:SecuredDebtMember
us-gaap:LineOfCreditMember
2024-12-01
2024-12-31
0001823239
mrvi:NewCreditAgreementMember
us-gaap:SecuredDebtMember
us-gaap:LineOfCreditMember
2024-01-01
2024-12-31
0001823239
mrvi:NewCreditAgreementMember
us-gaap:RevolvingCreditFacilityMember
us-gaap:LineOfCreditMember
srt:MaximumMember
2022-01-01
2022-01-31
0001823239
mrvi:NewCreditAgreementMember
us-gaap:RevolvingCreditFacilityMember
us-gaap:LineOfCreditMember
srt:MinimumMember
2022-01-01
2022-01-31
0001823239
mrvi:NewCreditAgreementMember
us-gaap:SecuredDebtMember
us-gaap:LineOfCreditMember
srt:MaximumMember
2024-12-31
0001823239
mrvi:NewCreditAgreementMember
us-gaap:SecuredDebtMember
us-gaap:LineOfCreditMember
srt:MinimumMember
2024-12-31
0001823239
us-gaap:InterestRateCapMember
2024-12-31
0001823239
us-gaap:InterestRateCapMember
2023-12-31
0001823239
mrvi:NewCreditAgreementMember
us-gaap:SecuredDebtMember
us-gaap:LineOfCreditMember
2023-12-31
0001823239
mrvi:NewCreditAgreementMember
us-gaap:RevolvingCreditFacilityMember
us-gaap:LineOfCreditMember
2023-12-31
0001823239
us-gaap:CommonClassAMember
2020-11-30
0001823239
us-gaap:CommonClassBMember
2020-11-30
0001823239
2020-11-30
0001823239
us-gaap:CommonClassAMember
2024-01-01
2024-12-31
0001823239
us-gaap:CommonClassBMember
2024-01-01
2024-12-31
0001823239
mrvi:BlockTradeMember
2024-05-01
2024-05-31
0001823239
mrvi:AlphazymeHoldingsIncMember
2023-01-22
2023-01-22
0001823239
2023-01-22
2023-01-22
0001823239
mrvi:MaravaiLifeSciencesHoldingsIncAndAlphazymeHoldingsIncMember
2023-01-22
2023-01-22
0001823239
mrvi:MaravaiLifeSciencesHoldingsLLCMember
2023-01-22
2023-01-22
0001823239
us-gaap:CommonClassBMember
2023-01-22
0001823239
us-gaap:RestrictedStockUnitsRSUMember
2024-01-01
2024-12-31
0001823239
us-gaap:RestrictedStockUnitsRSUMember
2023-01-01
2023-12-31
0001823239
us-gaap:RestrictedStockUnitsRSUMember
2022-01-01
2022-12-31
0001823239
us-gaap:EmployeeStockOptionMember
2024-01-01
2024-12-31
0001823239
us-gaap:EmployeeStockOptionMember
2023-01-01
2023-12-31
0001823239
us-gaap:EmployeeStockOptionMember
2022-01-01
2022-12-31
0001823239
us-gaap:EmployeeStockMember
2024-01-01
2024-12-31
0001823239
us-gaap:EmployeeStockMember
2023-01-01
2023-12-31
0001823239
us-gaap:EmployeeStockMember
2022-01-01
2022-12-31
0001823239
us-gaap:CommonClassBMember
2024-01-01
2024-12-31
0001823239
us-gaap:CommonClassBMember
2023-01-01
2023-12-31
0001823239
us-gaap:CommonClassBMember
2022-01-01
2022-12-31
0001823239
mrvi:A2020OmnibusIncentivePlanMember
2020-11-01
2020-11-30
0001823239
us-gaap:EmployeeStockMember
2020-11-01
2020-11-30
0001823239
us-gaap:EmployeeStockOptionMember
2024-01-01
2024-12-31
0001823239
us-gaap:EmployeeStockOptionMember
2023-01-01
2023-12-31
0001823239
us-gaap:EmployeeStockOptionMember
2022-01-01
2022-12-31
0001823239
us-gaap:RestrictedStockUnitsRSUMember
2023-12-31
0001823239
us-gaap:RestrictedStockUnitsRSUMember
2024-01-01
2024-12-31
0001823239
us-gaap:RestrictedStockUnitsRSUMember
2024-12-31
0001823239
us-gaap:RestrictedStockUnitsRSUMember
2023-01-01
2023-12-31
0001823239
us-gaap:RestrictedStockUnitsRSUMember
2022-01-01
2022-12-31
0001823239
us-gaap:ResearchAndDevelopmentExpenseMember
2024-01-01
2024-12-31
0001823239
us-gaap:ResearchAndDevelopmentExpenseMember
2023-01-01
2023-12-31
0001823239
us-gaap:ResearchAndDevelopmentExpenseMember
2022-01-01
2022-12-31
0001823239
us-gaap:RestructuringChargesMember
2024-01-01
2024-12-31
0001823239
us-gaap:RestructuringChargesMember
2023-01-01
2023-12-31
0001823239
us-gaap:RestructuringChargesMember
2022-01-01
2022-12-31
0001823239
mrvi:MaravaiTopcoHoldingsLLCMember
2024-12-31
0001823239
us-gaap:DomesticCountryMember
2024-12-31
0001823239
us-gaap:StateAndLocalJurisdictionMember
2024-12-31
0001823239
us-gaap:RelatedPartyMember
mrvi:MLSH1AndMLSH2Member
mrvi:TaxReceivableAgreementPaymentsMember
2024-12-31
0001823239
us-gaap:RelatedPartyMember
mrvi:TaxReceivableAgreementNonCurrentLiabilityDerecognizedMember
2024-01-01
2024-12-31
0001823239
us-gaap:RelatedPartyMember
mrvi:MLSH1AndMLSH2Member
mrvi:TaxReceivableAgreementPaymentsMember
2024-01-01
2024-12-31
0001823239
us-gaap:RelatedPartyMember
mrvi:MLSH1AndMLSH2Member
mrvi:TaxReceivableAgreementInterestPaymentsMember
2024-01-01
2024-12-31
0001823239
us-gaap:RelatedPartyMember
mrvi:MLSH1AndMLSH2Member
mrvi:TaxReceivableAgreementPaymentsMember
2023-01-01
2023-12-31
0001823239
us-gaap:RelatedPartyMember
mrvi:MLSH1AndMLSH2Member
mrvi:TaxReceivableAgreementInterestPaymentsMember
2023-01-01
2023-12-31
0001823239
us-gaap:RelatedPartyMember
mrvi:MLSH1AndMLSH2Member
mrvi:TaxReceivableAgreementPaymentsMember
2022-01-01
2022-12-31
0001823239
us-gaap:RelatedPartyMember
mrvi:MLSH1AndMLSH2Member
mrvi:TaxReceivableAgreementInterestPaymentsMember
2022-01-01
2022-12-31
0001823239
us-gaap:RelatedPartyMember
mrvi:MLSH1AndMLSH2Member
mrvi:TaxReceivableAgreementPaymentsMember
2023-12-31
0001823239
mrvi:TaxDistributionMember
mrvi:MaravaiTopcoHoldingsLLCMember
2024-01-01
2024-12-31
0001823239
mrvi:TaxDistributionMember
mrvi:MaravaiTopcoHoldingsLLCMember
mrvi:MaravaiLifeSciencesHoldingsIncMember
2024-01-01
2024-12-31
0001823239
mrvi:TaxDistributionMember
mrvi:MaravaiTopcoHoldingsLLCMember
2023-01-01
2023-12-31
0001823239
mrvi:TaxDistributionMember
mrvi:MaravaiTopcoHoldingsLLCMember
mrvi:MaravaiLifeSciencesHoldingsIncMember
2023-01-01
2023-12-31
0001823239
mrvi:TaxDistributionMember
mrvi:MaravaiTopcoHoldingsLLCMember
2022-01-01
2022-12-31
0001823239
mrvi:TaxDistributionMember
mrvi:MaravaiTopcoHoldingsLLCMember
mrvi:MaravaiLifeSciencesHoldingsIncMember
2022-01-01
2022-12-31
0001823239
us-gaap:OperatingSegmentsMember
mrvi:NucleicAcidProductionSegmentMember
2024-01-01
2024-12-31
0001823239
us-gaap:OperatingSegmentsMember
mrvi:BiologicsSafetyTestingSegmentMember
2024-01-01
2024-12-31
0001823239
us-gaap:OperatingSegmentsMember
2024-01-01
2024-12-31
0001823239
us-gaap:IntersegmentEliminationMember
mrvi:NucleicAcidProductionSegmentMember
2023-01-01
2023-12-31
0001823239
us-gaap:IntersegmentEliminationMember
mrvi:BiologicsSafetyTestingSegmentMember
2023-01-01
2023-12-31
0001823239
us-gaap:IntersegmentEliminationMember
2023-01-01
2023-12-31
0001823239
us-gaap:OperatingSegmentsMember
mrvi:NucleicAcidProductionSegmentMember
2023-01-01
2023-12-31
0001823239
us-gaap:OperatingSegmentsMember
mrvi:BiologicsSafetyTestingSegmentMember
2023-01-01
2023-12-31
0001823239
us-gaap:OperatingSegmentsMember
2023-01-01
2023-12-31
0001823239
us-gaap:IntersegmentEliminationMember
mrvi:NucleicAcidProductionSegmentMember
2022-01-01
2022-12-31
0001823239
us-gaap:IntersegmentEliminationMember
mrvi:BiologicsSafetyTestingSegmentMember
2022-01-01
2022-12-31
0001823239
us-gaap:IntersegmentEliminationMember
2022-01-01
2022-12-31
0001823239
us-gaap:OperatingSegmentsMember
mrvi:NucleicAcidProductionSegmentMember
2022-01-01
2022-12-31
0001823239
us-gaap:OperatingSegmentsMember
mrvi:BiologicsSafetyTestingSegmentMember
2022-01-01
2022-12-31
0001823239
us-gaap:OperatingSegmentsMember
2022-01-01
2022-12-31
0001823239
us-gaap:IntersegmentEliminationMember
2024-01-01
2024-12-31
0001823239
srt:RestatementAdjustmentMember
2024-04-01
2024-06-30
0001823239
srt:RestatementAdjustmentMember
2024-07-01
2024-09-30
0001823239
srt:ScenarioPreviouslyReportedMember
2024-06-30
0001823239
srt:RestatementAdjustmentMember
2024-06-30
0001823239
2024-06-30
0001823239
srt:ScenarioPreviouslyReportedMember
us-gaap:NonrelatedPartyMember
2024-06-30
0001823239
srt:RestatementAdjustmentMember
us-gaap:NonrelatedPartyMember
2024-06-30
0001823239
us-gaap:NonrelatedPartyMember
2024-06-30
0001823239
srt:ScenarioPreviouslyReportedMember
us-gaap:RelatedPartyMember
2024-06-30
0001823239
srt:RestatementAdjustmentMember
us-gaap:RelatedPartyMember
2024-06-30
0001823239
us-gaap:RelatedPartyMember
2024-06-30
0001823239
us-gaap:CommonClassAMember
2024-06-30
0001823239
srt:ScenarioPreviouslyReportedMember
us-gaap:CommonClassAMember
2024-06-30
0001823239
srt:RestatementAdjustmentMember
us-gaap:CommonClassAMember
2024-06-30
0001823239
us-gaap:CommonClassBMember
2024-06-30
0001823239
srt:ScenarioPreviouslyReportedMember
us-gaap:CommonClassBMember
2024-06-30
0001823239
srt:RestatementAdjustmentMember
us-gaap:CommonClassBMember
2024-06-30
0001823239
srt:ScenarioPreviouslyReportedMember
2024-04-01
2024-06-30
0001823239
2024-04-01
2024-06-30
0001823239
srt:ScenarioPreviouslyReportedMember
2024-01-01
2024-06-30
0001823239
srt:RestatementAdjustmentMember
2024-01-01
2024-06-30
0001823239
2024-01-01
2024-06-30
0001823239
srt:ScenarioPreviouslyReportedMember
2024-09-30
0001823239
srt:RestatementAdjustmentMember
2024-09-30
0001823239
2024-09-30
0001823239
srt:ScenarioPreviouslyReportedMember
us-gaap:NonrelatedPartyMember
2024-09-30
0001823239
srt:RestatementAdjustmentMember
us-gaap:NonrelatedPartyMember
2024-09-30
0001823239
us-gaap:NonrelatedPartyMember
2024-09-30
0001823239
srt:ScenarioPreviouslyReportedMember
us-gaap:RelatedPartyMember
2024-09-30
0001823239
srt:RestatementAdjustmentMember
us-gaap:RelatedPartyMember
2024-09-30
0001823239
us-gaap:RelatedPartyMember
2024-09-30
0001823239
us-gaap:CommonClassAMember
2024-09-30
0001823239
srt:ScenarioPreviouslyReportedMember
us-gaap:CommonClassAMember
2024-09-30
0001823239
srt:RestatementAdjustmentMember
us-gaap:CommonClassAMember
2024-09-30
0001823239
us-gaap:CommonClassBMember
2024-09-30
0001823239
srt:ScenarioPreviouslyReportedMember
us-gaap:CommonClassBMember
2024-09-30
0001823239
srt:RestatementAdjustmentMember
us-gaap:CommonClassBMember
2024-09-30
0001823239
srt:ScenarioPreviouslyReportedMember
2024-07-01
2024-09-30
0001823239
2024-07-01
2024-09-30
0001823239
srt:ScenarioPreviouslyReportedMember
2024-01-01
2024-09-30
0001823239
srt:RestatementAdjustmentMember
2024-01-01
2024-09-30
0001823239
2024-01-01
2024-09-30
0001823239
us-gaap:SubsequentEventMember
mrvi:MolecularAssembliesMember
2025-01-01
2025-01-31
0001823239
mrvi:OfficinaeBioMember
us-gaap:SubsequentEventMember
2025-02-01
2025-02-28
0001823239
mrvi:OfficinaeBioMember
us-gaap:SubsequentEventMember
2025-02-28
0001823239
2024-10-01
2024-12-31
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-K
|
|
|
|
|
|
|
ý
|
ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
For
the fiscal year ended
December 31, 2024
OR
|
|
|
|
|
|
|
o
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Commission
file number 001-39725
Maravai LifeSciences Holdings, Inc.
(Exact
name of registrant as specified in its charter)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Delaware
|
|
|
|
85-2786970
|
| (State
or other jurisdiction of incorporation or organization) |
|
|
|
(I.R.S.
Employer Identification No.) |
|
|
|
|
|
|
10770
Wateridge Circle
Suite 200
San Diego
, California
|
|
|
|
92121
|
|
(Address
of principal executive offices)
|
|
|
|
(Zip
code) |
______________________________
Registrant’s
telephone number, including area code: (
858) 546-0004
______________________________
Securities
registered pursuant to Section 12(b) of the Act:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Title
of each class |
|
Trading
Symbol(s) |
|
Name
of each exchange on which registered |
|
Class A common stock,
$0.01 par value
|
|
MRVI
|
|
The Nasdaq Stock Market LLC
|
Securities
registered pursuant to section 12(g) of the Act: None
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities
Act. Yes o
No
x
Indicate
by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of
the Act. Yes o
No
x
Indicate
by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d)
of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports); and (2) has been subject to such filing requirements for the
past 90 days. Yes x No o
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be
submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12
months (or for such shorter period that the registrant was required to submit such files). Yes
x No o
Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated
filer, a smaller reporting company, or an emerging growth company. See the definitions of “large
accelerated filer,” “accelerated filer,” “smaller reporting company,” and
“emerging growth company” in Rule 12b-2 of the Exchange Act.
|
|
|
|
|
|
|
|
|
|
|
|
|
Large accelerated filer
|
ý
|
Accelerated
filer |
o
|
| Non-accelerated
filer |
o
|
Smaller
reporting company |
o
|
|
|
Emerging
growth company |
o
|
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended
transition period for complying with any new or revised financial accounting standards provided pursuant to
Section 13(a) of the Exchange Act. o
Indicate
by check mark whether the registrant has filed a report on and attestation to its management's assessment of
the effectiveness of its internal control over financial reporting under Section 404(b) of the
Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its
audit report.
x
If
securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial
statements of the registrant included in the filing reflect the correction of an error to previously issued
financial statements.
x
Indicate
by check mark whether any of those error corrections are restatements that required a recovery analysis of
incentive-based compensation received by any of the registrant’s executive officers during the
relevant recovery period pursuant to §240.10D-1(b). ▢
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).
Yes
☐
No x
The
aggregate market value of the registrant’s voting common equity held by non-affiliates as of
June 28, 2024, the last business day of the registrant’s most recently completed second fiscal
quarter, was approximately $
868.8 million,
based on the closing price of the registrant’s common stock on the Nasdaq Global Select Market
of
$7.16 per
share.
As
of March 11, 2025,
143,651,803 shares of the registrant’s Class A common stock were outstanding and
110,684,080 shares of the registrant’s Class B common stock were outstanding.
DOCUMENTS
INCORPORATED BY REFERENCE
The
information required by Part III of this Report, to the extent not set forth herein, is incorporated
herein by reference from the registrant’s definitive proxy statement relating to the Annual
Meeting of Shareholders to be held in 2025, which definitive proxy statement shall be filed with the
Securities and Exchange Commission within 120 days after the end of the fiscal year to which this Report
relates.
TABLE
OF CONTENTS
SPECIAL
NOTE REGARDING FORWARD LOOKING STATEMENTS
This
Annual Report on Form 10-K contains “forward-looking statements” within the meaning of the safe
harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Investors are cautioned that
statements which are not strictly historical statements constitute forward looking statements, including,
without limitation, statements under the captions “Risk Factors,” “Management’s
Discussion and Analysis of Financial Condition and Results of Operations” and “Business”
and are identified by words like “believe,” “expect,” “may,”
“will,” “should,” “seek,” “anticipate,”
“intend,” “plan,” “goal,” “project,” “estimate,”
“likely,” or “could” and similar expressions.
Forward-looking
statements are neither historical facts nor assurances of future performance. Instead, they are based only
on our current beliefs, expectations and assumptions regarding the future of our business, future plans and
strategies, projections, anticipated events and trends, the economy and other future conditions. Because
forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and
changes in circumstances that are difficult to predict and many of which are outside of our control. Our
actual results and financial condition may differ materially from those indicated in the forward-looking
statements. Therefore, you should not rely on any of these forward-looking statements. Important factors
that could cause our actual results and financial condition to differ materially from those indicated
include those discussed under the heading “Summary of Risk Factors” and “Item 1A. Risk
Factors” as well as those discussed elsewhere in this Annual Report on Form 10-K.
Any
forward-looking statement made by us in this report is based only on information currently available to us
and speaks only as of the date of this report. We undertake no obligation to publicly update any
forward-looking statement, whether written or oral, that may be made from time to time, whether as a result
of new information, future developments or otherwise.
Part
I.
Item
1. Business
Description
of Business
Maravai
LifeSciences Holdings, Inc. (also referred to in this document as “Maravai,” “we,”
“us,” “our” or “the Company”) is a leading life sciences company
dedicated to providing critical products that drive the development of groundbreaking vaccines, drug
therapies, cell and gene therapies, and diagnostics. Our solutions empower research into human diseases and
support the entire biopharmaceutical development process – from early discovery to commercialization.
We proudly serve a diverse global customer base, including the world’s top biopharmaceutical companies
ranked by research and development investment, emerging biotech firms, renowned academic research
institutions and leading in
vitro
diagnostics companies.
Our
comprehensive product portfolio addresses the critical stages of biopharmaceutical development,
offering:
•complex
nucleic acids for vaccine, therapeutic and diagnostic applications;
•custom
enzymes for research and diagnostic use; and
•antibody-based
solutions to detect impurities during the production of biopharmaceutical products.
At
Maravai, we are committed to supporting our customers throughout their journey – from early discovery
to commercialization – helping bring life-changing innovations to patients worldwide.
Our
Strategic Priorities for Sustainable Growth:
1)Catalyze
the Customer Journey. We deliver solutions from across our portfolio that help to accelerate discoveries and
create exceptional customer experiences.
2)Find
a Better Way. We constantly seek smarter, more efficient ways to enhance our processes, systems, and
operations.
3)Deliver
Unquestionable Quality. Every action we take reflects our commitment to excellence, knowing that our
products and services ultimately impact human lives – because behind every innovation, there’s a
patient waiting.
4)Lead
Together. We harness the power of diverse perspectives and experiences to drive forward-thinking innovations
together.
At
Maravai, our goal is to achieve diversified, sustainable growth across our businesses by providing essential
products and services that fuel the advancement of next-generation medicines from discovery to the
clinic.
Business
Segments and Products
We
report our business in two reporting segments – Nucleic Acid Production and Biologics Safety
Testing.
We
market our Nucleic Acid Production business under the TriLink BioTechnologies®, Glen Research and
Alphazyme brands. Our Biologics Safety Testing business is comprised of Cygnus Technologies®.
Our
brands, products and the end markets they serve are depicted in the following image:
Nucleic
Acid Production (76% of Revenue for the Year Ended December 31, 2024)
We
are a global provider of highly modified, complex nucleic acids and related products. We have recognized
expertise in complex chemistries and products provided under exacting quality standards. Our core offerings
include mRNA, long and short oligonucleotides, our proprietary CleanCap® mRNA capping technology, mRNA
building blocks, oligonucleotide building blocks and specialty enzymes. Our offerings address key customer
needs for critical components, from research to good manufacturing processes (“GMP”) grade raw
materials and active pharmaceutical ingredient (“API”) manufacturing. The nucleic acid
production market includes the production and synthesis of reagents for research and manufacturing of DNA
and RNA-based biologics, including cell and gene therapies, mRNA therapeutics and synthetic biology
approaches.
mRNA
lies at the core of our capabilities and expertise. We have developed significant proficiency in mRNA
technology, driven by our belief in its transformative potential as a therapeutic modality. The first
clinical trial involving an mRNA therapeutic agent took place in 2016. Since then, over 1,500 clinical
trials are now in the pipeline, encompassing a wide range of medical applications.
These
trials include vaccine development programs targeting infectious diseases such as avian flu, Lyme disease,
malaria, HIV, tuberculosis, shingles, rabies, yellow fever, respiratory syncytial virus (RSV), and Zika.
Beyond infectious diseases, mRNA-based programs are addressing various medical conditions, including
ornithine transcarbamylase deficiency, glycogen storage disorders, alpha-1 antitrypsin deficiency, acute
lymphoblastic leukemia, Hurler syndrome, ovarian cancer, cardiovascular disease, and autoimmune
disorders.
Cell
and gene therapy programs also leverage mRNA across multiple therapeutic modalities, such as CRISPR/Cas9,
transcription activator-like effector nucleases (TALENs), enzyme replacement therapies, allogeneic CAR-T
cells, and base editing. These advancements underscore the broad and growing impact of mRNA technology in
revolutionizing healthcare.
We
offer the following nucleic acid products: mRNA, RNA Capping (CleanCap), oligonucleotides, oligonucleotide
synthesis inputs, nucleoside triphosphates, custom nucleic acid chemistry, and specialty enzymes. We also
offer Discovery/RUO and GMP mRNA synthesis through our manufacturing services.
mRNA.
mRNA is an intermediary molecule that translates the genetic information stored in DNA into proteins. The
genetic information stored in DNA is transferred to mRNA in a cellular process called transcription. This
process occurs in the nucleus of cells. DNA, a double stranded molecule, is unwound and copied as mRNA by
the enzyme RNA polymerase. mRNA is then
transferred
out of the nucleus to the cytosol, a component of the cytoplasm of a cell, where it serves as a blueprint
for making cellular proteins by a multi-component organelle complex called the ribosome.
mRNA
has traditionally been a difficult molecule for vaccine and therapeutic purposes. mRNA is inherently
unstable compared to DNA and is susceptible to degradation by ubiquitous enzymes called RNases. mRNAs are
also physically and chemically fragile and can degrade at elevated temperatures and under shear forces that
occur during downstream manufacturing processes. We have developed manufacturing processes that overcome
many of these obstacles, resulting in highly effective mRNA.
We
develop and manufacture mRNA products to support vaccine and therapeutic programs from pre-clinical
development through and including clinical phases, including scale-up and analytical development services.
The mRNA molecules may serve as APIs for diverse applications, such as enzyme replacement therapies, gene
editing therapies and vaccines. We offer both research grade material and material made under GMP conditions
to support all phases of development.
RNA
Capping.
Within
the mRNA category, we also offer our patented CleanCap technology. CleanCap analogs principally serve the
mRNA vaccine and therapeutics markets. Cap analogs are a component of mRNA that aids in protein production
as well as in making mRNA more stable inside cells. For mRNA to serve as a template to make a protein, it
requires a special cap at the 5’ end of the molecule. The cap structure also affects the stability of
the mRNA. Lack of a cap can result in activation of the innate immune system, which can affect the
production of the desired protein or elicit undesired biological effects. We offer a suite of CleanCap
analogs that are specifically made for therapeutics and vaccines. CleanCap analogs are sold as a stand-alone
reagents or bundled with other raw materials such as Nucleoside triphosphates (“NTPs”) and
enzymes to support the synthesis of mRNA . Our cap analogs are a critical component of several mRNA vaccines
and therapies in development.


Traditionally,
the 5’ cap has been added in one of two ways. The cap can be added post mRNA synthesis by an enzymatic
process. This enzymatic method has several drawbacks, including the high cost of the capping enzymes as well
as the need to perform additional processing steps to the invitro-transcription (“IVT”)
synthesis process to remove enzymes and byproducts of the capping reaction. While capping efficiency is
usually high, the extra processing steps typically result in degradation and mRNA of poorer quality. The
second method is to add a synthetic cap analog into the transcription reaction such that the mRNA is
transcribed and capped in a single step. Anti-reverse cap analog (“ARCA”) is an example of a cap
analog that is added to the transcription reaction. This avoids the workflow challenges of the enzymatic
process, but typically results in lower yields.
Like
ARCA, CleanCap analogs are synthetic, chemically-made mRNA 5’ cap analogs added to the transcription
process in a single step. Unlike ARCA, however, CleanCap results in significantly higher levels of capping
efficiency, resulting in very low levels of uncapped mRNA, which in turn minimizes the risk of activation of
the innate immune system. In addition, CleanCap’s higher mRNA yields compared to ARCA result in lower
cost of goods. When compared to enzymatic capping, CleanCap removes the additional downstream purification
steps required.
We
currently offer several variations of the CleanCap molecule, serving the needs of mRNA and self-amplifying
RNA developers. CleanCap is available in two quality grades, research use only for discovery and development
activities, and a GMP-grade for clinical and commercial applications. Our newest CleanCap analog, CleanCap
M6, was introduced in May 2023 and is our most robust cap analog to date, enabling mRNA that delivers higher
levels of protein production.
CleanCap
mRNA products represented 72% of our Nucleic Acid Production revenue for the year ended December 31,
2024 (including the revenue from CleanCap products). We estimate that revenue from high-volume sales of
CleanCap for
commercial
phase vaccine programs represented approximately 25.4% and 21.0% of our total revenues for the years ended
December 31, 2024 and 2023, respectively.
Oligonucleotides.
The oligonucleotide product category supports broad customer applications, including therapeutics,
in
vitro
diagnostics, NGS and CRISPR-based gene editing. Most of our TriLink BioTechnologies oligonucleotide products
are custom manufactured DNA or RNA sequences, often highly modified and produced as RUO or under GMP
conditions for use in development, clinical and commercial applications.
Oligonucleotide
Synthesis Inputs.
Our
product offerings through Glen Research include reagents and support supplies for DNA and RNA
oligonucleotide synthesis, labeling, modification and purification. We are a reputable and trusted vendor
with a large portfolio, quality brand, knowledgeable technical support, and responsive customer service. In
addition to oligonucleotide synthesis service providers, our customer base includes life science, biopharma
and diagnostic companies, academic institutions and government organizations, all of which internally
manufacture their own oligonucleotide products.
Nucleoside
Triphosphates.
Nucleoside triphosphates (“NTPs”) are the precursors to DNA and RNA. They are composed of a
nitrogen base bound to either ribose or deoxyribose with three phosphate groups added to the sugar. We
manufacture NTPs that are used in polymerase chain reactions, in sequencing reactions and in the manufacture
of mRNA. The NTPs can be unmodified, composed of the four standard bases, or modified, with a base altered
to enhance a particular biological property, such as the ability to evade the innate immune system in
therapeutic applications. TriLink BioTechnologies NTPs are used by customers in both research and clinical
trial applications. Our manufacturing capabilities for NTPs now includes both RUO and GMP-grade.
Custom
Nucleic Acid Chemistry.
TriLink BioTechnologies has synthetic chemistry expertise and proprietary manufacturing processes allowing
for the highest purity NTP, amidite and custom nucleotide services. We serve a diverse market of diagnostics
and therapeutic developers that require novel molecules that are otherwise unavailable on the market.
Typically, these molecules are initially manufactured in small quantities, and then scaled to meet the need
of larger diagnostic platforms or therapeutic applications once positive candidates have been identified by
the customer.
Specialty
Enzymes.
Enzymes
are critical to almost every phase of nucleic acid production and provide the key starting materials for the
IVT process to make mRNA. Alphazyme provides custom, scalable molecular biology enzymes with a full product
line of IVT, NGS, life science and diagnostic enzyme solutions. Alphazyme enzymes are also incorporated into
the TriLink Biotechnologies CleanScript mRNA production workflow.
Discovery
mRNA synthesis.
Through TriLink BioTechnologies, we offer a core set of products and services geared toward customers doing
early-stage development work. We produce mRNA utilizing standard sequences for generalized research or using
customer supplied sequences for custom built constructs. We also provide process development services to
optimize customers’ transcription and purification processes. These services can integrate with our
cap analogs, NTP products and IVT enzymes and have access to our analytical and QC method development.
GMP
mRNA synthesis.
Our TriLink BioTechnologies GMP mRNA manufacturing services offer a clear pathway for customers running
clinical trials. We focus on building partnerships with our customers in the emerging market of cell and
gene therapy to ensure we are well-positioned to be an extension of their development teams. Our services
feature robust quality management systems and include process development and scale-up, phase-appropriate,
regulatory submission support, and in-house analytical services for mRNA analysis and characterization.
Biologics
Safety Testing (24% of Revenue for the Year Ended December 31, 2024)
For
over 25 years, the Cygnus Technologies brand has been associated with products and services that enable the
detection of impurities present in bioproduction. Our biologics safety testing products are used during
development and scale-up, during the regulatory approval process and throughout commercialization. We are
recognized globally for the detection of host cell proteins (“HCPs”) and process-related
impurities during bioproduction.
Our
customers in this segment manufacture a broad range of biopharmaceutical products. These include monoclonal
antibodies and recombinant proteins, both as novel biologics and biosimilars, and recombinant vaccines,
including oncolytic vaccines to treat cancer. We also provide products that support the development and
commercialization of cell and gene therapies. Recombinant vaccines and cell and gene therapies rely on
manufacturing of various viral vectors produced using recombinant nucleic acid and cell culture
technologies. Viral vector manufacturing processes require rigorous analytics, including testing for
process-related impurities such as HCPs, host cell DNA, purification leachates, growth media additives and
enzymes used in viral vector purification processes. Of all process-related impurities, HCPs present the
most complex impurity. Per regulatory requirements, viral vectors used as a component of CAR-T cell
therapies or as gene therapies must be produced in certain cell lines, purified and tested for the presence
of host cell proteins. All of the 24 existing FDA-and EMA-approved CAR-T Cell and Gene Therapies use Cygnus
Host Cell Protein enzyme-linked immunosorbent assay (“ELISA”) kits for HCP testing for
commercial product lot release. Five of these 24 therapies were approved in 2024.
ELISA
is the benchmark method for monitoring levels of process-related impurities during the purification process
and in product release testing. The advantages of well-developed ELISA kits include the ability to measure
very low levels of impurities in the presence of high amounts of drug product, and are readily transferable
across an organization from process development to manufacturing and quality control bioanalytical groups.
Though relatively simple to run, these ELISA kits require a high level of expertise to design, develop and
qualify.
Customers
establishing biopharmaceutical manufacturing processes may use off-the-shelf or generic HCP kits provided by
manufacturers like ourselves, or they may choose to design their own in-house assays for their specific
processes. Some customers may choose to use generic assays early in development and migrate to
process-specific assays later. The trend in recent years has been for customers to increasingly use generic
assays throughout their development and commercialization pathway, relying on our expertise and the
established performance of our assays supported by our comprehensive state-of-the-art assay qualification
services. If customers choose to develop process-specific assays, we offer custom antibody production and
assay development as well as characterization services to meet their needs.
Our
comprehensive catalog of Cygnus Technologies HCP ELISA kits covers 25 expression platforms and provides the
specificity and sensitivity to detect impurities with reproducibility, which supports regulatory compliance.
Our reputation for quality is recognized by the industry and global regulatory agencies, with Cygnus
Technologies assays used as reference methods throughout the industry and to support manufacturing and
quality control of commercialized biologics and gene therapy products.
Our
customers in this segment are biopharmaceutical companies, contract research organizations
(“CROs”), contract development and manufacturing organizations (“CDMOs”) and life
science companies.
Cygnus
Technologies product categories include HCP ELISA kits, other bioprocess impurity and contaminant ELISA
kits, viral clearance prediction kits, ancillary reagents and custom services.
HCP
ELISA Kits.
HCP ELISA kits are bioassays used to detect residual proteins from the expression system used in
bioproduction. HCPs constitute a major group of process-related impurities produced using cell culture
technology no matter what cell expression platform is used. HCPs pose potential health risks for patients
and the risk of failure of safety endpoints for drug manufacturers. When present in the administered
product, even at low levels, HCPs can induce an undesired immune response, interfere with drug efficacy and
impact drug stability. HCPs are a critical quality attribute for biologics safety testing development and
must be adequately removed during the downstream purification process.
Other
Impurity and Contaminant Kits.
Our products in this category include kits for measuring Protein A leachate, which results from the affinity
purification method used for monoclonal antibody therapeutic agents; ELISA kits for measuring additives in
growth media, such as bovine serum albumin; kits for measuring host cell DNA; ELISA kits to detect and
quantify residual endonuclease impurities in recombinant viral vector and vaccine preparations; and ELISA
kits to quantify residual AAV2, AAV8 and AAV9 ligands resulting from affinity purification method used for
adeno associated virus (AAV)-based gene therapies.
Viral
Clearance Prediction kits.
Following its 2020 acquisition of the MockV® technology, Cygnus Technologies has introduced the Minute
Virus of Mice kit and the MockV RVLP Kit, which are novel, proprietary viral clearance prediction tools that
includes a non-infectious “mock virus particle” mimicking the physicochemical properties of live
virus that may be present endogenously in the drug substance or introduced during bioproduction. These kits
enable manufacturers to conduct viral clearance assessments easily and economically and to predict outcomes
in-house ahead of costly and logistically challenging live viral clearance studies.
Ancillary
Reagents.
Our ancillary reagent products include antibodies, antigens, sample diluents and other auxiliary products
necessary to optimize applications for customer processes.
Custom
Services.
We provide process-specific antibody and ELISA development, qualification and maintenance services. In
addition, we have pioneered advanced orthogonal methods including antibody affinity extraction (AAE™),
mass spectrometry for HCP antibodies coverage analysis and HCP identification, which we provide as custom
services.
Our
Competitive Strengths
We
believe we are a leader in providing nucleic acid products and services and biologics safety testing
products and services to biopharmaceutical customers worldwide. Our success is built on the ability of our
proprietary technologies and products, provided under exacting quality standards, to reliably serve our
customers’ needs for critical raw materials, and the process innovation, quality, analytical expertise
and reliability of our services.
Leading
Supplier of Critical Solutions for Life Sciences from Discovery to Commercialization
We
seek to be an important component of our customers’ supply chain by providing inputs that are central
to the performance of their products and processes throughout the product lifecycle. By collaborating with
customers early in the development phase, our products frequently follow our customers’ development
path to commercialization and are likely to be incorporated as raw materials in their on-market products and
processes. Our decades-long experience and track record, coupled with our ongoing investment in facilities
and quality systems, allow our customers to rely on us for their critical products. Our approach is to be a
trusted partner throughout the life cycle of our customers’ products.
Innovation,
Proprietary Technologies and Expertise Underpin Our Portfolio
Our
expertise in complex chemistries leads customers to seek our collaboration in designing complex products
that meet high performance expectations. We believe the solutions we provide, in many cases, cannot be
provided effectively by our competitors. In certain cases, like our CleanCap technology, our know-how
features differentiated performance characteristics and is backed by intellectual property. In other cases,
such as our HCP products, our antibodies are proprietary and therefore can only be supplied by us. We
believe the proprietary nature of our expertise and products solidifies our long-term customer
relationships.
Products
with Outstanding Quality Performance
We
believe our products stand out when compared to those of our competitors because they present innovative
solutions to customer needs, while providing reliable performance and quality. CleanCap, for example, offers
advantages over competing capping technologies in yield, process efficiency, stability and safety. Our
oligonucleotides address complex chemistry challenges, which we believe few competitors can address. We
believe that our HCP ELISA kits have defined the market for impurity detection and have become a
de
facto
standard in biologics safety testing.
Trusted
Brands
Our
TriLink BioTechnologies, Glen Research, Alphazyme and Cygnus Technologies brands are well known in their
respective markets for innovation, consistent quality, and performance. This brand recognition has been
earned over decades. Our manufacturing processes, quality standards, technical support and high-touch
customer service ensure that we maintain the reputation of our brands.
State-of-the-Art
Manufacturing Facilities
Our
biopharmaceutical customers manufacture their products to meet stringent quality standards under strict
regulatory guidelines and expect their critical suppliers to meet their exacting requirements. Our customers
further expect that we have the production capacity to meet their needs in a timely manner.
We
have designed and constructed four world-class manufacturing facilities and, since 2022, we have expanded
our facility footprint by over 95,000 square feet to support expanded capabilities and future growth.
Experienced
Leaders and Talented Workforce
Our
management includes experienced leaders with demonstrated records of success at Maravai and other highly
regarded industry participants. They have decades of combined experience and expertise on the forefront of
life sciences innovation. In addition, as of December 31, 2024, approximately 28% of our workforce have
earned advanced degrees and all receive rigorous on the job training. We believe the quality of our
personnel is critical to ensuring the collaborative, long-standing relationships we maintain with many of
our customers.
Commercial
We
have relationships with the following categories of customers: developers of therapeutics, cell and gene
therapies and vaccines, other biopharmaceutical and life science research companies, academic institutions
and molecular diagnostic companies. Our biopharmaceutical customers include startups, established
biotechnology companies and large pharmaceutical companies developing enzyme replacement therapies, gene
editing therapies, ex
vivo
therapies and vaccines.
Our
commercial function includes direct sales, marketing, customer service, technical support, quoting and
proposals, client program management and channel management. We serve customers through direct and indirect
sales in each business segment, with a primary focus on our biopharmaceutical and large diagnostics and
commercial customers. We serve our academic customers via web, email and phone ordering as well as through
key partnerships where our reagent products and services can be accessed through partnerships. We support
all customers in-field and in-house technical support, alliance and program management and customer
service.
We
address customers outside the United States with a combination of direct sales and distributors. We serve
many of our biopharmaceutical customers, especially in our nucleic acid production segment, via direct sales
worldwide. Our distributors also serve our customers in over 40 countries and provide customer service and
local sales and marketing.
Competition
We
compete with a range of companies across our segments.
Nucleic
Acid Production
Within
nucleic acid production, we compete with four primary types of companies: (1) chemistry companies that
create and produce the basic monomers, amidites, and supports that go into the creation of an
oligonucleotide; (2) oligonucleotide manufacturers that specialize in custom oligonucleotide development of
varying complexities and scales; (3) mRNA biotechnology companies that create fully processed mRNA and
specialize in custom, complex orders; and (4) CDMOs that have the capability to accept work from large
biopharmaceutical companies and serve as the outsourcing entity for the development and manufacturing of
nucleic acid products. However, it is important to note that CDMOs seldom offer proprietary products.
For
mRNA capping analogs, we compete principally with Thermo Fisher Scientific, Aldevron (a subsidiary of
Danaher), and New England Biolabs, who offer alternatives to CleanCap with enzymatic capping solutions. Many
biopharmaceutical companies produce capping solutions in-house using enzymatic or ARCA processes. However,
given CleanCap’s high yield and process efficiency, many customers who previously insourced these
processes have begun to partner with us. We believe our products and services are more effective than those
of our competitors. Deep scientific expertise, intellectual property protection and specialty equipment
serve as barriers to entry in this space.
For
our mRNA offerings, we compete with Aldevron, Patheon, eTheRNA, Lonza, Catalent, and Samsung Biologics,
among others. We believe we have a reputation for our expertise in the RNA space with talented scientists
who are constantly pushing the frontier of RNA science. This scientific expertise and the required high-cost
equipment serve as barriers to entry. In addition to our expertise, we believe our GMP cleanroom
manufacturing process differentiates us from competitors.
For
custom oligonucleotides, we compete with a number of manufacturers. Custom oligonucleotide providers include
those that provide complex, highly modified oligonucleotides and those that provide less complex offerings.
In the custom oligonucleotide space, complexity is based on the length of the sequence and level of
modification to the phosphate backbone. Large manufacturers like Integrated DNA Technologies, Thermo Fisher
Scientific and EMD Millipore Corporation (“Millipore Sigma”) serve less complex customer needs
while we, LGC Biosearch Technologies and GenScript Biotech Corporation serve more complex customer needs. In
the custom oligonucleotide market, we have a reputation for accepting complex orders and delivering high
purity products that reduce researcher re-work and save money. Quick turnaround times and the ability to
produce at scale are essential requirements in this segment.
In
the oligonucleotide synthesis inputs market, we compete against large distributor-manufacturers like Thermo
Fisher and Millipore Sigma while also serving them as customers. Our Glen Research brand has a long history
in this industry, which drives customer loyalty, and has a reputation for high-fidelity technical service,
focusing on supplying and sourcing highly modified inputs for its customers.
For
our specialty enzymes offering, we compete with New England Biolabs, Thermo Fisher, QIAGEN, and Roche, among
others. We believe that Alphazyme is uniquely positioned in the market to address customers’ custom
enzyme needs and has a reputation of being a flexible partner.
Biologics
Safety Testing
For
drugs in early development, we compete against other bioprocess impurity kit providers such as BioGenes
(“BioGenes”) or Enzo Life Sciences (“Enzo”). Competitors generally offer fewer
expression platforms (generally between one and three) compared to our offering of 24 expression platforms
and over 100 different impurity detection kits. As a drug successfully moves forward to validation and
approval stages, a customer may either continue with an off-the-shelf kit or they may begin the process to
develop a custom assay that is tailored to meet their specific host cell and manufacturing process needs.
During the entire drug development process, and especially during this decision, we are partners with the
manufacturer and provide our expertise to help them make the best bioprocess quality control and
testing-related decisions.
If
a drug manufacturer continues with an off-the-shelf assay from development to validation and approval, they
will generally stay with the incumbent kit provider due to the extensive validation they have conducted. For
custom assay development, our main competitors are BioGenes, Rockland Immunochemicals and some CDMOs and
CROs with custom assay development capabilities. The trend in recent years has been for CDMOs, CROs and
large biopharmaceutical companies to focus on core competencies and outsource host cell protein assays or
qualify off-the-shelf kits when possible.
Licenses
and Collaborations
Broad
Patent License Agreement
We
(through TriLink BioTechnologies) entered into a Nonexclusive Patent License and Material Transfer Agreement
with The Broad Institute, Inc. (“Broad”) effective as of July 5, 2017, and amended on
September 29, 2017 (the “Broad Patent License Agreement”). Broad, together with a consortium of
educational institutions (including Harvard University and the Massachusetts Institute of Technology), owns
and controls certain patent rights relating to genome editing technology, including the CRISPR-Cas9 gene
editing processes and have a licensing program for use and commercialization of technologies and products
covered by the underlying patent rights. Under the Broad Patent License Agreement, Broad grants to us a
non-exclusive, royalty-bearing, non-transferable and non-sublicensable, worldwide license under the licensed
patent rights to manufacture and sell products and to perform certain in
vitro
processes or services on a fee-for-service basis, in each case, solely as research tools for research
purposes (excluding human, clinical or diagnostic uses). We must use diligent efforts to develop products,
introduce products into the commercial market and make products reasonably available to the public. We are
obligated to pay a mid-five figure annual license maintenance fee and royalties in the range of 5% to 10% on
net sales of covered products and processes.
The
term of the Broad Patent License Agreement extends through the expiration of the last to expire claim of any
of the licensed patents. We are entitled to terminate the Broad Patent License Agreement for convenience at
any time on at least three (3) months written notice, in which case we must continue to pay license
maintenance fees and royalties as noted above for the sale of products that are not covered by the specific
claims of the licensed patent rights but are otherwise derived from such licensed patent rights or from
products covered by such licensed patent rights. Broad may terminate the license for our uncured failure to
make payments, for our uncured material breach or if we bring a patent challenge against any of the
institutional rights holders.
Manufacturing
and Supply
We
occupy facilities in San Diego, California, Leland, North Carolina, Sterling, Virginia, and Jupiter,
Florida.
Our
Wateridge facility in San Diego is engaged in the manufacture of reagents. The facility was designed and
built by us in conjunction with the building owner to contain fully functional chemical and biological
manufacturing operations from material receiving to product distribution and has its own loading dock,
manufacturing gas delivery system, solvent delivery and waste system, ISO Class 8 and ISO Class 7 designated
customer manufacturing suites and integrated building management systems for required site control.
In
addition to the Wateridge facility, we have two other facilities in San Diego, Flanders 1 and Flanders 2.
Flanders 1 provides us with additional GMP manufacturing capacity and the optionality downstream to
manufacture materials beyond current quality requirements for mRNA raw materials, including CleanCap.
Flanders 1 supports increased batch run sizes and overall throughput. Flanders 2 was purpose built to
support GMP-grade manufacturing and to support customers into Phase II clinical trials through commercial
mRNA drug substance. Both the Flanders 1 and Flanders 2 facilities include integrated manufacturing systems,
quality water improvements from Reverse Osmosis De-ionized grade water to WFI (“Water For
Injection”), which is pharmaceutical grade water, and other facility infrastructure investments to
support potential customer needs related to quality. We took occupancy of the Flanders 1 and 2 facilities in
2023 and began manufacturing from both locations in 2024.
Our
Leland, North Carolina facility is engaged in the development, manufacture and processing of antibodies and
HCP and Impurity ELISA kits, MockV Kits, as well as execution of all analytical services. The operations
include R&D, laboratory, manufacturing, kitting, cold storage, shipping and waste handling capabilities.
The fully customized design includes a Mass Spectrometry Center of Excellence and specialized cell culture
facilities. Extensive process flow analysis has been incorporated into the facility design to optimize and
enhance both our manufacturing and kit packaging operations.
Our
Sterling, Virginia facility was designed to perform quality control, aliquoting, packaging and shipping and
houses the appropriate space and systems.
Our
Jupiter, Florida, location is a purpose built enzyme production facility that can produce enzymes to
kilogram quantities. The facility includes environmental controls such as HEPA filtration, pressure,
temperature, and humidity monitoring, with vertical integration of all enzyme development, production, and
testing operations. Our enzymes are produced under the controls of an ISO 13485:2016 compliant QMS.
Our
supply chain is supported by a diverse network of specialized suppliers and transportation partners and
undergoes regular evaluations to assess supplier quality and identify risks, including those associated with
supply concentration. These proactive evaluations enable us to implement strategic measures to effectively
manage and mitigate risks. By continuously optimizing our supply chain, we ensure operational resilience and
maintain a steady supply of critical materials for our products.
Government
Regulation
We
provide products used for basic research or as raw materials used by biopharmaceutical customers for further
processing, and active pharmaceutical ingredients used for preclinical and clinical studies. The quality of
our products is critical to researchers looking to develop novel vaccines and therapies and for
biopharmaceutical customers who use our products as raw materials or who are engaged in preclinical studies
and clinical trials. Biopharmaceutical customers are subject to extensive regulations by the FDA and similar
regulatory authorities in other countries for conducting clinical trials and commercializing products for
therapeutic, vaccine or diagnostic use. This regulatory scrutiny results in our customers imposing rigorous
quality requirements on us as their supplier through supplier qualification processes and customer
contracts.
Our
nucleic acid and biologics safety testing segments produce materials used in research and biopharmaceutical
production, clinical trial vaccines and vaccine support products. We produce materials in support of our
customers’ manufacturing businesses and to fulfill their validation requirements, as applicable. These
customer activities are subject to regulation and consequently require these businesses to be inspected by
the FDA and other national regulatory agencies under their respective cGMP regulations. These regulations
result in our customers imposing quality requirements on us for the manufacture of our products, and
maintain records of our manufacturing, testing and control activities. In addition, the specific activities
of some of our businesses require us to hold specialized licenses for the manufacture, distribution and/or
marketing of particular products.
All
of our sites are subject to licensing and regulation, as appropriate under federal, state and local laws
relating to:
•the
surface and air transportation of chemicals, biological reagents and hazardous materials;
•the
handling, use, storage and disposal of chemicals (including toxic substances), biological reagents and
hazardous waste;
•the
procurement, handling, use, storage and disposal of biological products for research purposes;
•the
safety and health of employees and visitors to our facilities; and
•protection
of the environment and general public.
Regulatory
compliance programs at each of our businesses are managed by a dedicated group responsible for regulatory
affairs and compliance, including the use of outside consultants. Our compliance programs are also managed
by quality management systems, such as vendor supplier programs and training programs. Within each business,
we have established Quality Management Systems (“QMS”) responsible for risk based internal audit
programs to manage regulatory requirements and client
quality
expectations. Our QMS program ensures that management has proper oversight of regulatory compliance and
quality assurance, inclusive of reviews of our system practices to ensure that appropriate quality controls
are in place and that a robust audit strategy confirms requirements for compliance and quality
assurance.
Research
Products
Our
products and operations may be subject to extensive and rigorous regulation by the FDA and other federal,
state, or local authorities, as well as foreign regulatory authorities. The FDA regulates, among other
things, the research, development, testing, manufacturing, clearance, approval, labeling, storage,
recordkeeping, advertising, promotion, marketing, distribution, post-market monitoring and reporting, and
import and export of pharmaceutical drugs. Certain of our products are currently marketed as research use
only (“RUO”).
We
believe that our products that are marketed as RUO products are exempt from compliance with GMP regulations
under the FDCA. RUO products cannot make any claims related to safety, effectiveness or diagnostic utility
and they cannot be intended for human clinical diagnostic use. In November 2013, the FDA issued a final
guidance on products labeled RUO, which, among other things, reaffirmed that a company may not make any
clinical or diagnostic claims about an RUO product. The FDA will also evaluate the totality of the
circumstances to determine if the product is intended for diagnostic purposes. If the FDA were to determine,
based on the totality of circumstances, that our products labeled and marketed for RUO are intended for
diagnostic purposes, they would be considered medical products that will require clearance or approval prior
to commercialization.
We
do not make claims related to safety or effectiveness and they are not intended for diagnostic or clinical
use. However, the quality of our products is critical to meeting customer needs, and we therefore
voluntarily follow the quality standards outlined by the International Organization for Standardization for
quality management systems (ISO 9001:2015) for the design, development, manufacture, and distribution of our
products. Some biopharmaceutical customers desire extra requirements including quality parameters and
product specifications, which are outlined in customer-specific quality agreements. These products are
further processed and validated by customers for their applications. Customers qualify us as part of their
quality system requirements, which can include a supplier questionnaire and on-site audits. Customers
requalify us on a regular basis to ensure our quality system, processes and facilities continue to meet
their needs and we are meeting requirements outlined in relevant customer agreements.
Active
Pharmaceutical Ingredients (“APIs”) for Clinical Trials
We
provide APIs to customers for use in preclinical studies through and including clinical trials. We hold a
drug manufacturing license with the California Food and Drug Branch of the California Department of Public
Health for manufacture of APIs for clinical use and are subject to inspection to maintain licensure.
Manufacture of APIs for use in clinical trials is regulated under § 501(a)(2)(B) of the FDCA, but
is not subject to the current GMP regulations in 21 CFR § 211 by operation of 21 CFR § 210.
We follow the principles detailed in the International Council for Harmonisation (“ICH”) Q7,
Good Manufacturing Practice Guide for Active Pharmaceutical Ingredients (Section 19, APIs For Use in
Clinical Trials) in order to comply with the applicable requirements of the FDCA, and the comparable GMP
principles for Europe; European Community, Part II, Basic Requirements for Active Substances Used as
Starting Materials (Section 19, APIs For Use in Clinical Trials). APIs are provided to customers under
customer contracts that outline quality standards and product specifications. As products advance through
the clinical phases, requirements become more stringent, and we work with customers to define and agree on
requirements and risks associated with their product.
Customers’
biopharmaceutical products early in their development have a high failure rate and often do not advance
through the clinical stages to commercialization. Our customers are required to follow regulatory pathways
that are not always known, which may cause additional unforeseen requirements placed on us as their contract
manufacturer and delays in advancing to the next stage of product development. We also provide novel
compounds for cell and gene therapy applications, which result in additional challenges for our customers
attempting to obtain regulatory approval given that this field is relatively new, and regulations are
evolving. Customer clinical trials rely on approval from institutional review boards (“IRBs”)
and patient and volunteer enrollment, which makes timelines unpredictable for advancing to the next stage in
product development. Preclinical studies and clinical trials conducted by our customers are also expensive
and data may be negative or inconclusive causing customers to abandon projects that were expected to
continue. Regulatory requirements in both the United States and abroad are always evolving and compliance
with future laws may require significant investment to ensure compliance.
Other
Regulatory Requirements
Environmental
laws and regulations.
We believe that our operations comply in all material respects with applicable laws and regulations
concerning environmental protection. To date, there have been no material effects upon our earnings or
competitive position resulting from our compliance with applicable laws or regulations enacted or adopted
relating to the protection of the
environment. Our
capital and operating expenditures for pollution control in 2024 and 2023 were not material and are not
expected to be material in 2025.
Intellectual
Property
Our
success depends in part on our ability to obtain and maintain intellectual property protection for our
products and services, defend and enforce our intellectual property rights, preserve the confidentiality of
our trade secrets, and operate without infringing, misappropriating or otherwise violating valid and
enforceable intellectual property rights of others. We seek to protect the investments made into the
development of our products and services by relying on a combination of patents, trademarks, copyrights,
trade secrets, including know-how, and license agreements. We also seek to protect our proprietary products
and services, in part, by requiring our employees, consultants, contractors and other third parties to
execute confidentiality agreements and invention assignment agreements.
Patents.
Our
intellectual property strategy is focused on protecting, through patents and other intellectual property
rights, our core products and services, including CleanCap, and related instrumentation and applications. In
addition, we protect our ongoing research and development into critical reagents for cell and gene therapy
through patents and other intellectual property rights. Our patent portfolio generally includes patents and
patent applications relating to compositions and methods for the production of CleanCap, oligonucleotides,
nucleic acids, immunofluorescence assays, and mock viral particles. We may own provisional patent
applications, and provisional patent applications are not eligible to become issued patents until, among
other things, we file national stage patent applications either directly or via the PCT within 12 or 30 to
32 months, respectively. If we do not timely file any national stage patent applications, we may lose our
priority date with respect to our provisional patent applications and any patent protection on the
inventions disclosed in such provisional patent applications. We cannot predict whether any such patent
applications will result in the issuance of patents that provide us with any competitive advantage.
Issued
patents extend for varying periods depending on the date of filing of the patent application or the date of
patent issuance and the legal term of patents in the countries in which they are obtained. Generally,
utility patents issued for applications are granted a term of 20 years from the earliest effective filing
date of a non-provisional patent application. Issued patents may be extended beyond the natural 20-year term
for regulatory or administrative delay in accordance with provisions of applicable local law. As a result,
our patent portfolio may not provide us with sufficient rights to exclude others from commercializing
products similar or identical to ours.
The
following granted patents relate to our CleanCap products and technology.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Jurisdiction
|
|
Patent
Number |
|
Title
|
|
Expiration
|
|
United
States |
|
10494399
|
|
Compositions
and methods for synthesizing 5′-Capped RNAs
|
|
2036
|
|
United
States |
|
10519189
|
|
Compositions
and methods for synthesizing 5′-Capped RNAs
|
|
2036
|
|
United
States |
|
10913768C1
|
|
Compositions
and methods for synthesizing 5′-Capped RNAs
|
|
2036
|
|
United
States |
|
11414453
|
|
Compositions
and methods for synthesizing 5′-Capped RNAs
|
|
2036
|
|
United
States |
|
11878991
|
|
Compositions
and methods for synthesizing 5′-Capped RNAs
|
|
2036
|
|
United
States |
|
11578095
|
|
Compositions
and methods for synthesizing 5′-Capped RNAs
|
|
2036
|
|
United
States |
|
12103944
|
|
Compositions
and methods for synthesizing 5′-Capped RNAs
|
|
2036
|
|
Europe
|
|
3352584
|
|
Compositions
and methods for synthesizing 5′-Capped RNAs
|
|
2036
|
|
Europe
|
|
3954225
|
|
Compositions
and methods for synthesizing 5′-Capped RNAs
|
|
2036
|
|
Europe
|
|
3906789
|
|
Compositions
and methods for synthesizing 5′-Capped RNAs
|
|
2036
|
|
Europe
|
|
4104687
|
|
Compositions
and methods for synthesizing 5′-Capped RNAs
|
|
2036
|
|
Europe
|
|
4140491
|
|
Compositions
and methods for synthesizing 5′-Capped RNAs
|
|
2036
|
|
Australia
|
|
2016328645
|
|
Compositions
and methods for synthesizing 5′-Capped RNAs
|
|
2036
|
|
Australia
|
|
2021206780
|
|
Compositions
and methods for synthesizing 5′-Capped RNAs
|
|
2036
|
|
Australia
|
|
2023201915
|
|
Compositions
and methods for synthesizing 5′-Capped RNAs
|
|
2036
|
|
Canada
|
|
2999274
|
|
Compositions
and methods for synthesizing 5′-Capped RNAs
|
|
2036
|
|
China
|
|
ZL
202310734863.0
|
|
Compositions
and methods for synthesizing 5′-Capped RNAs
|
|
2036
|
|
Hong
Kong
|
|
HK40080484
|
|
Compositions
and methods for synthesizing 5′-Capped RNAs
|
|
2036
|
|
Hong
Kong
|
|
HK40068021
|
|
Compositions
and methods for synthesizing 5′-Capped RNAs
|
|
2036
|
|
Hong
Kong
|
|
HK40054592
|
|
Compositions
and methods for synthesizing 5′-Capped RNAs
|
|
2036
|
|
Hong
Kong
|
|
HK40075972
|
|
Compositions
and methods for synthesizing 5′-Capped RNAs
|
|
2036
|
|
Japan
|
|
6814997
|
|
Compositions
and methods for synthesizing 5′-Capped RNAs
|
|
2036
|
|
Japan
|
|
7082174
|
|
Compositions
and methods for synthesizing 5′-Capped RNAs
|
|
2036
|
|
Japan
|
|
7594563
|
|
Compositions
and methods for synthesizing 5′-Capped RNAs
|
|
2036
|
|
Korea,
Republic of
|
|
10-2500198
|
|
Compositions
and methods for synthesizing 5′-Capped RNAs
|
|
2036
|
|
Korea,
Republic of
|
|
10-2670937
|
|
Compositions
and methods for synthesizing 5′-Capped RNAs
|
|
2036
|
The
following patents relate to our MockV related products and technology.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Jurisdiction
|
|
Patent
Number |
|
Title
|
|
Expiration
|
|
United
States |
|
9632087
|
|
Methods
for evaluating viral clearance from a biopharmaceutical solution employing mock viral
particles
|
|
2034
|
|
United
States |
|
10309963
|
|
Methods
for evaluating viral clearance from a process solution employing mock viral particles
|
|
2034
|
|
Europe
|
|
3044339
|
|
Methods
and kits for quantifying the removal of mock virus particles from a purified solution
|
|
2034
|
|
Europe
|
|
3250696
|
|
Stock
Solution of Retrovirus Like Particles with Method and Kit
|
|
2036
|
|
Australia
|
|
2014320015
|
|
Methods
and kits for quantifying the removal of Mock Virus Particles from a purified solution
|
|
2034
|
|
Australia
|
|
2021200484
|
|
Methods
and kits for quantifying the removal of Mock Virus Particles from a purified solution
|
|
2034
|
|
China
|
|
105899684
|
|
Methods
and kits for quantifying pseudoviral particles removed from purified solution
|
|
2034
|
|
Japan
|
|
6549126
|
|
Methods
and kits for removal of mock virus particles from a purified solution
|
|
2034
|
|
United
States
|
|
11754565
|
|
Methods
and kits for removal of mock virus particles from a purified solution
|
|
2034
|
Trademarks.
Our trademark portfolio is designed to protect the brands of our current and future products and includes
U.S. trademark registrations for our company name, Maravai LifeSciences, subsidiary names Cygnus
Technologies and TriLink BioTechnologies and various product names, such as CleanCap and MockV.
Trade
Secrets.
We also rely on trade secrets, including know-how, unpatented technology and other proprietary information,
to strengthen our competitive position. We have determined that certain technologies, such as the production
of antibodies for biologics safety testing, are better kept as trade secrets, rather than pursuing patent
protection. To prevent disclosure of trade secrets to others, it is our policy to enter into nondisclosure,
invention assignment and confidentiality agreements with parties who have access to trade secrets, such as
our employees, collaborators, outside scientific collaborators, consultants, advisors and other third
parties. These agreements also provide that all inventions resulting from work performed for us or relating
to our business and conceived or completed during the period of employment or assignment, as applicable, are
our exclusive property. In addition, we take other appropriate precautions, such as physical and
technological security measures, to guard against misappropriation of our proprietary information by third
parties.
We
intend to pursue additional intellectual property protection to the extent we believe it would advance our
business objectives. Notwithstanding these efforts, there can be no assurance that we will adequately
protect our intellectual property or provide any competitive advantage. We cannot provide any assurance that
any patents will be issued from our pending or any future patent applications or that any issued patents
will adequately protect our products or technology. Our intellectual property rights may be invalidated,
held unenforceable, circumvented, narrowed or challenged. In addition, the laws of various foreign countries
where our products are distributed may not protect our intellectual property rights to the same extent as
laws in the United States. Furthermore, it may be difficult to protect our trade secrets. While we have
confidence in the measures we take to protect and preserve our trade secrets, they may be inadequate and can
be breached, and we may not have adequate remedies for violations of such measures. In addition, our trade
secrets may otherwise become known or be independently discovered by competitors. Moreover, our invention
assignment agreements with employees, collaborators, outside scientific collaborators, consultants, advisors
and other third parties may not be self-executing or otherwise provide meaningful protection for our
intellectual property rights. If we do not adequately protect our intellectual property, third parties,
including our competitors, may be able to use our technologies to produce and market products that compete
with us and erode our competitive advantage. For more information regarding risks related to intellectual
property, please see Item 1A. “Risk Factors—Risks Related to our Intellectual
Property.”
Human
Capital Management: Empowering Our Future
Our
people are integral to driving Maravai's innovation, growth, and market leadership.
As
of December 31, 2024, our team had over 570 full-time employees globally. Our workforce represents a
diversity of backgrounds, with 44.3% identifying as female, 55.5% as male, 0.2% as non-binary, and
approximately 48.6% as ethnically or
racially
diverse. We take pride in the fact that, as of December 31, 2024, 27.7% of our team held advanced
degrees, underscoring our emphasis on science and innovation.
Our
compensation and benefits packages are designed to attract and retain the talent we need to be competitive
in the markets we serve. We extend equity awards to all full-time employees through our 2020 Omnibus
Incentive Plan, alongside opportunities to participate in our 2020 Employee Stock Purchase Plan, both to
align employee and shareholder interests. Our commitment to excellence ensures every employee receives
thorough on-the-job training. We also understand that great people managers are the key to enabling and
unlocking the potential of our employees. In 2024, we continued our bi-monthly “Leading
Together” people leader series with all levels of our people leaders to ensure they had the critical
knowledge, perspective, and tools to develop their people and align their teams towards company goals and
objectives.
We
actively work to foster direct and open lines of communication between all levels of staff through our
all-employee engagement survey, our quarterly all-employee town halls, management skip level meetings, and
an emphasis on our core values (Connected, Open, Driven, and Empowered). Our 2024 company-wide engagement
survey reached a participation rate of 95% and all levels of leadership engage in action planning based on
the results.
As
a leading life sciences company, we are committed to the health, safety and well-being of our employees. All
employees that could be exposed to potential hazards are required to complete annual health and safety
training, including laboratory chemical safety, hazard communication and hazardous waste management
trainings. In 2024 we created EHS dashboards so employees can easily access and visualize EHS metrics,
implemented a "weekly safety talk" communication highlighting a new safety topic each week along with safety
metrics, and conducted approximately 150 equipment onboarding safety assessments, 38 Job Safety Analyses,
and 314 safety inspections.
Available
Information
Our
website is located at www.maravai.com, and our investor relations website is located at
investors.maravai.com. Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports
on Form 8-K, and any amendments to these reports, are available through our investor relations website, free
of charge, as soon as reasonably practicable after we electronically file or furnish them with the SEC. Our
filings with the SEC are also available, free of charge, on the SEC's website at www.sec.gov. We webcast via
our investor relations website our earnings calls and certain events we participate in or host with members
of the investment community. Our investor relations website also provides notifications of news or
announcements regarding our financial performance and other items that may be material or of interest to our
investors, including SEC filings, investor events, press and earnings releases. The contents of our website
are not incorporated by reference into this Annual Report on Form 10-K or in any other report or document we
file with the SEC, and any references to our website are intended to be inactive textual references
only.
Item
1A. Risk Factors
In
addition to the other information in this report and our other filings with the SEC, you should carefully
consider the risks and uncertainties described below, which could materially and adversely affect our
business operations, financial condition and results of operations. The risks and uncertainties described
below are not the only ones we face. Additional risks and uncertainties that we are unaware of, or that we
currently believe are not material, may also become important factors that affect us. If any of the
following risks occur, our business, financial condition, results of operations and prospects could be
materially and adversely affected. In that event, the price of our Class A common stock could decline, and
you could lose all or part of your investment.
Summary
of Risk Factors
The
following is a summary of the material risks we and/or our shareholders face in the normal course of our
business operations. The list below is not exhaustive, and is qualified in its entirety by reference to the
full risk factor discussion that follows this summary.
Risks
Related to Our Business and Strategy
•The
level of our customers’ spending on and demand for outsourced nucleic acid production and biologics
safety testing products and services.
•Our
operating results are prone to significant fluctuation, which may make our future operating results
difficult to predict and could cause our actual operating results to fall below expectations or any guidance
we may provide.
•Uncertainty
regarding the extent and duration of our revenue associated with high-volume sales of CleanCap® for
commercial phase vaccine programs and the dependency of such revenue, in important respects, on factors
outside our control.
•Shifts
in the trade, economic and other policies and priorities of the U.S. federal government on our and our
customers’ current and future business operations.
•Our
ability to attract, retain and motivate a highly skilled workforce.
•Use
of our products by customers in the production of vaccines and therapies, some of which represent relatively
new and still-developing modes of treatment, and the impact of unforeseen adverse events, negative clinical
outcomes, development of alternative therapies, or increased regulatory scrutiny of these modes of treatment
and their financial cost on our customers’ use of our products and services.
•Competition
with life science, pharmaceutical and biotechnology companies who are substantially larger than us and
potentially capable of developing new approaches that could make our products, services and technology
obsolete.
•The
potential failure of our products and services to not perform as expected and the reliability of the
technology on which our products and services are based.
•The
risk that our products do not comply with required quality standards.
•Market
acceptance of our life science reagents.
•Our
ability to efficiently manage our strategic acquisitions and organic growth opportunities.
•Natural
disasters, geopolitical instability (including the ongoing military conflicts in Ukraine and the Middle
East) and other catastrophic events.
•Risks
related to our acquisitions, including whether we achieve the anticipated benefits of acquisitions of
businesses or technologies.
•Product
liability lawsuits.
•Our
dependency on a limited number of customers for a high percentage of our revenue and our ability to maintain
our current relationships with such customers.
•Our
reliance on a limited number of suppliers or, in some cases, sole suppliers, for some of our raw materials
and the risk that we may not be able to find replacements or immediately transition to alternative
suppliers.
•The
risk that our products become subject to more onerous regulation by the FDA or other regulatory agencies in
the future.
Risks
Related to Our Intellectual Property and Technology
•Our
ability to obtain, maintain and enforce sufficient intellectual property protection for our current or
future products.
•The
risk that a future cyber-attack or security breach cannot be prevented.
•Our
ability to protect the confidentiality of our proprietary information.
•The
risk that one of our products may be alleged (or found) to infringe on the intellectual property rights of
third parties.
•Compliance
with our obligations under intellectual property license agreements.
•Our
or our licensors’ failure to maintain the patents or patent applications in-licensed from a third
party.
•Our
ability to adequately protect our intellectual property and proprietary rights throughout the world.
Risks
Related to Our Indebtedness
•Our
existing level of indebtedness and our ability to raise additional capital on favorable terms.
•Our
ability to generate sufficient cash flow to service all of our indebtedness.
•Our
potential failure to meet our debt service obligations.
•Restrictions
on our current and future operations under the terms applicable to our credit agreement.
Risks
Related to Our Organizational Structure
•Our
dependence, by virtue of our principal asset being our interest in Maravai Topco Holdings, LLC (“Topco
LLC”), on distributions from Topco LLC to pay our taxes and expenses, including payments under a tax
receivable agreement with the former owners of Topco LLC (the “Tax Receivable Agreement” or
“TRA”) together with various limitations and restrictions that impact Topco LLC’s ability
to make such distributions.
•The
risk that conflicts of interest could arise between our shareholders and Maravai Life Sciences Holdings, LLC
(“MLSH 1”), the only other member of Topco LLC, and impede business decisions that could benefit
our shareholders.
•The
substantial future cash payments we may be required to make under the Tax Receivable Agreement to MLSH 1 and
Maravai Life Sciences Holdings 2, LLC (“MLSH 2”), an entity through which certain of our former
owners hold their interests in the Company and the negative effect of such payments.
•The
fact that our organizational structure, including the TRA, confers certain benefits upon MLSH 1 and MLSH 2
that will not benefit our other common shareholders to the same extent as they will benefit MLSH 1 and MLSH
2.
•Our
ability to realize all or a portion of the tax benefits that are expected to result from the tax attributes
covered by the Tax Receivable Agreement.
•The
possibility that we will receive distributions from Topco LLC significantly in excess of our tax liabilities
and obligations to make to make payments under the Tax Receivable Agreement.
•Unanticipated
changes in effective tax rates or adverse outcomes resulting from examination of our income or other tax
returns.
Risks
Related to Being a Public Company
•Risks
and uncertainty related to the restatement of our previously issued quarterly financial statements.
•Our
ability to remediate the material weaknesses in our internal control over financial reporting in a timely
manner.
•Our
ability to design and maintain effective internal control over financial reporting in the future.
Risks
Related to Our Class A Common Stock
•The
fact that investment entities affiliated with GTCR, LLC (“GTCR”) currently control a majority of
the voting power of our outstanding common stock and may have interests that conflict with ours or yours in
the future.
•Risks
related to our “controlled company” status within the meaning of the corporate governance
standards of NASDAQ.
•The
potential anti-takeover effects of certain provisions in our corporate organizational documents.
•Potential
sales of a significant portion of our outstanding shares of Class A common stock.
•Potential
preferred stock issuances and the anti-takeover impacts of any such issuances.
Risks
Related to Our Business and Strategy
We
are dependent on the level of our customers’ spending on and demand for outsourced nucleic acid
production and biologics safety testing products and services. A reduction in spending or change in spending
priorities of our customers could significantly reduce demand for our products and services and could have a
material adverse effect on our business, financial condition, results of operations, cash flows and
prospects.
The
success of our business depends primarily on the number and size of contracts with our customers, primarily
pharmaceutical and biotechnology companies, for our products and services. For example, during the COVID-19
pandemic we benefited from a significant increase in demand for our products and service, including our
proprietary CleanCap® analogs that are used by our customers in the production of COVID-19 vaccines,
and also benefited during 2021 and 2022, more generally, from the overall growth of the global biologics
market, higher research and development budgets of our customers and a greater degree of outsourcing by our
customers. The level of our customers’ spending on and demand for our products and services is also
subject to, among other things, their own financial performance, changes in their available resources, the
timing of their commercial manufacturing initiatives, their decisions to acquire in-house manufacturing
capacity (rather than outsource), their spending priorities, including research and development budgets, and
their budgetary policies and practices, which, in turn, are dependent upon a number of factors outside of
our control.
Our
customers determine their research and development budgets based on several factors, including their need to
develop new biological products, their competitors’ discoveries, developments and commercial
manufacturing initiatives and the anticipated market, clinical and reimbursement scenarios for specific
products and therapeutic areas. In addition, consolidation in the industries in which our customers operate
may have an impact on our customers’ spending as they integrate acquired operations, including
research and development departments and associated budgets.
Access
to capital is critical to many of our customers’ ability to fund research and development,
particularly early-stage biotechnology and pharmaceutical companies, and historically, these companies have
funded their research and development activities by raising capital privately or in the equity markets. Past
declines and uncertainties in the capital markets, including as a result of ongoing macroeconomic challenges
during 2023 and into 2024, including elevated interest rates and volatile credit markets, limited access to
capital and negatively affected companies’ ability to fund research and development efforts due to a
considerable contraction in the level of investment in venture- and private equity-backed startup companies
and funding for companies at all stages, particularly early- and late-stage companies. Notwithstanding
ongoing liquidity challenges, global venture capital investment increased slightly in 2024, however,
investments in information technology and artificial intelligence (“AI”) companies overshadowed
other sector categories, with over twice the level of investment relative to the health and life sciences
sector. Lower levels of venture capital investment in the health and life sciences sector, together with
hesitancy about a broader economic recovery, including as a result of geopolitical instability and actual
and potential shifts in U.S. and foreign trade, economic and other policies, has led certain of our
customers to implement more stringent budgetary policies designed to conserve capital, which in turn, caused
a reduction in research and development spending and a decline in further purchases of our products and
services. We have no assurance as to whether, or when, such research and development spending may stabilize
or increase, if at all. Further, if the funding of venture- and private equity-backed biotechnology and
pharmaceutical companies remains weak or weakens further, the research and development budgets of our
customers may be further reduced or eliminated altogether, which could impact future demand for our products
and services.
If
our customers maintain stringent budgetary policies or further reduce their spending on our products and
services as a result of any of these or other factors, our business, financial condition, results of
operations, cash flows and prospects would be materially and adversely affected.
Moreover,
we have no control over the timing and volume of purchases by our customers, and as a result, our operating
results may fluctuate significantly, and our future revenue and operating results can be difficult to
forecast. Our inability to forecast fluctuations in demand could harm our business, financial position and
future results of operations. See also “—Our
operating results may fluctuate significantly in the future, which makes our future operating results
difficult to predict and could cause our operating results to fall below expectations or any guidance we may
provide”
below.
Our
operating results are prone to significant fluctuations, which may make our future operating results
difficult to predict and could cause our actual operating results to fall below expectations or any guidance
we may provide.
We
have no control over the timing and volume of purchases by our customers. We estimate that revenue from
high-volume sales of CleanCap® for commercial phase vaccine programs represented approximately 25.4%,
21.0% and 67.9% of our total revenues for the years ended December 31, 2024, 2023 and 2022,
respectively. The amount, timing and durability of future high-volume CleanCap® orders have become
increasingly difficult to forecast because historical customers for such orders have been unable or
unwilling to provide visibility into their anticipated future needs and plans to purchase CleanCap®. As
a result, our quarterly and annual operating results may fluctuate significantly, which makes it difficult
for us to predict our revenues and future operating results, and if high-volume orders for CleanCap® do
not materialize in the future at similar or greater levels than they have in the past, our revenues and cash
flows will significantly decrease which, in turn, could have a material adverse impact on our future
operating results and financial condition.
Fluctuations
in our operating results may be driven by a variety of factors, many of which are outside of our control,
including, but not limited to:
•unused
inventory of our products that our customers have on hand, which are not indication-specific, and our lack
of insight as to the amount of unused inventory of our products that such customers have on hand;
•changes
in the level of our customers’ spending on and demand for our products and services, including as a
result of, among other things, their own financial performance, changes in their available resources, timing
of their commercial manufacturing initiatives, their decision to acquire in-house manufacturing capacity
(rather than outsource), their spending priorities, including research and development budgets, and their
budgetary policies and practices;
•our
ability to increase penetration in our existing markets and expand into new markets;
•our
customers accelerating, canceling, reducing or delaying orders as a result of developments related to their
pre-clinical studies and clinical trials;
•the
relative reliability and robustness of our products and services;
•changes
in governmental regulations or the regulatory posture toward our business;
•the
volume and mix of the products and services we sell;
•changes
in the production or sales costs related to our products and services;
•the
success of our newer products, such as our CleanCap® and mRNA products;
•the
rate of introduction of other new products or product enhancements by us or others in our industry;
•the
timing and amount of expenditures that we may incur to acquire, develop or commercialize additional
products, services and technologies or for other purposes, such as the expansion of our facilities;
•changes
in governmental and academic funding of life sciences research and developments or changes that impact
budgets, budget cycles or seasonal spending patterns of our customers;
•future
accounting pronouncements or changes in our accounting policies;
•difficulties
encountered by our commercial carriers in delivering our products, whether as a result of external factors
such as weather or negative macroeconomic conditions or internal issues such as labor disputes;
•the
timing and magnitude of any adjustments to the Tax Receivable Agreement liability;
•changes
in the assessment of the realizability of our deferred tax assets;
•general
market conditions and other factors outside of our control, such as natural disasters, geopolitical unrest,
war, terrorism, public health issues or other catastrophic events; and
•the
other factors described in this “Risk Factors” section.
The
impact of any one of the factors discussed above, or the cumulative effects of a combination of such
factors, could result in significant fluctuations and unpredictability in our quarterly and annual operating
results. As a result, comparisons of our operating results on a period-to-period basis may not be
meaningful. Investors should not rely on our past results as an indication of our future performance.
As
a result of variability and unpredictability, we may also fail to meet the expectations of industry or
financial analysts or investors for any period. If our revenue or operating results fall short of the
expectations of analysts or investors or any guidance we may provide, or if the guidance we provide falls
short of the expectations of analysts or investors, the price of our
Class
A common stock could decline substantially. Such a stock price decline could occur even when we have met or
exceeded any previously publicly stated guidance we may have provided.
The
extent and duration of our revenue associated with high-volume sales of CleanCap® for commercial phase
vaccine programs are uncertain and are dependent, in important respects, on factors outside our
control.
Certain
of our products, including our proprietary CleanCap® analogs, are used by our customers in the
production of commercial phase vaccines, notably COVID-19 vaccines. During each of the years ended December
31, 2022, 2021 and 2020, our results
of operations and cash flows were significantly and positively impacted by high-volume sales of our
proprietary CleanCap®
analogs
and highly modified
RNA products, particularly mRNA, for commercial vaccines. However, as a result of the general decrease in
market
demand for COVID-19 related products and services, including the supply and manufacture of COVID-19
vaccines, and in particular, following the end of U.S. federal public health emergency declaration and World
Health Organization declaration of the end of the pandemic in early May 2022, we experienced substantial
declines in high-volume orders for CleanCap®. For the years ended December 31, 2024, 2023 and
2022, we estimate that revenue from high-volume sales of CleanCap® for commercial phase vaccine
programs and related services represented approximately 25.4%, 21.0% and 67.9%, respectively, of our total
revenues. We expect to experience further declines in high-volume sales of CleanCap® for the
aforementioned reasons, as well as a result of unused inventory of our products that our customers have on
hand, which are not indication-specific. We are currently unable to fully estimate the impact of this unused
inventory on our future revenues, nor are we able to predict when or if our customers will resume purchasing
CleanCap® analogs for commercial phase vaccine production, if at all. Our longer-term revenue prospects
for high-volume CleanCap® orders are highly uncertain but are expected to remain substantially lower
than pandemic highs. Additionally, the ongoing manufacture and supply of COVID-19 vaccines (including
bivalent booster doses) by our customers is uncertain and subject to various political, social, economic,
and regulatory factors that are outside of our control, including the emergence, duration and intensity of
new virus variants; regional resurgences of the virus globally; the availability and administration of
pediatric and booster vaccinations, vaccine supply constraints, vaccine hesitancy and the effectiveness of
vaccines against new virus strains; competition faced by our customers from other COVID-19 vaccine
manufacturers and the development and availability of antiviral therapeutic alternatives; political and
social debate relating to the need for, efficacy of, or side effects related to one or more specific
COVID-19 vaccines; the politicization of vaccinations and increase in vaccine skepticism; and the U.S.
economy and global economy. As the supply and manufacture of COVID-19 vaccines by our customers slows, or
becomes no longer necessary, including if COVID-19 vaccines by our customers’ competitors are
determined or perceived to be more effective, we expect that demand for high-volume sales of CleanCap®
will continue to significantly decrease, which would have a material adverse effect on our revenue, results
of operations and financial condition.
Shifts
in the trade, economic and other policies and priorities of the U.S. federal government could negatively
impact, directly or indirectly, our and our customers’ current and future business operations and our
financial condition, revenue and earnings.
Our
reagents are sold primarily to biopharmaceutical and academic organizations developing novel vaccines and
therapies and performing basic research. Research and development spending by our customers and the
availability of government research funding can fluctuate due to changes in available resources,
institutional and governmental budgetary policies, mergers of pharmaceutical and biotechnology companies,
spending priorities, and general economic conditions. Our biologics safety testing customers are
biopharmaceutical companies, contract research organizations (“CROs”), contract development and
manufacturing organizations (“CDMOs”) and life science companies, which largely serve the
biopharmaceutical industry. Our nucleic acid production customers are largely vaccine and therapeutic drug
makers or diagnostics manufacturers, which rely in part on government healthcare-related policies and
funding. As a result, changes in government funding for certain research, decreases in or the imposition of
limits on government spending more generally (including if the Office of Management and Budget reenacts its
call for a freeze on payments for federal grants), skepticism of or hostility to mRNA as a modality, or
reductions in overall healthcare spending could negatively impact us or our customers and, correspondingly,
our sales to them, which would negatively affect our business, operations and financial condition.
Additionally,
demand for our products and services could be adversely impacted if changes in U.S. federal budgetary policy
or actual and potential shifts in U.S. and foreign trade policy, including the imposition (or threatened
imposition) of tariffs, trade restrictions or potential retaliatory actions, cause customers to reduce their
operating budgets, adversely impact our customers’ ability to commit funds to purchase our products,
or otherwise cause customers to delay, cancel, decrease or forego purchases of our products and services.
Further, since the majority of our customers’ contracts can be terminated, delayed or reduced in scope
upon short notice or no notice, this may require us to carry excess inventory to manage through unevenness
in order activity and lead to unanticipated fluctuations in our quarterly revenue and earnings. If we are
not able to forecast and adequately manage through changes in our customers’ order requirements, our
productivity, profitability, results of operations, cash flows and financial position could be negatively
impacted. A significant reduction or delay in governmental funding as a result of changes to U.S. federal
budgetary policy, or the perception that a shift in budgetary policy may occur, could cause a
decline
in demand for our products and services and adversely affect our performance and result in declines in our
revenue and earnings.
Our
ability to develop and market our products and services and our overall performance depends on our ability
to attract, retain and motivate a highly skilled workforce.
Our
future success depends largely upon the continued service of our management and scientific staff and our
ability to attract, retain and motivate highly skilled technical, scientific, management and marketing
personnel, who deliver high-quality and timely services to our customers and keep pace with cutting-edge
technologies and developments in biologics. We face significant competition in the hiring and retention of
such personnel from other companies, other providers of outsourced biologics services, research and academic
institutions, government and other organizations who have superior funding and resources and who may use
these resources to pursue personnel more aggressively than we are. Additionally, certain highly skilled
personnel that we seek to employ may be subject to non-competition or other restrictive covenants
restricting their ability to work for us or within certain aspects of our business for a period of time.
Although some jurisdictions (including the State of California) prohibit non-competition agreements as a
matter of law, and the U.S. Federal Trade Commission has issued a notice of proposed rulemaking that would
prohibit employers in the U.S. from using non-compete agreements, if we hire certain employees from
competitors or other companies, those former employers may attempt to assert that these employees and/or we
have breached certain legal obligations, resulting in a diversion of our time and resources.
We
have, from time to time, experienced, and we expect to continue to experience, difficulty in hiring and
retaining employees with appropriate qualifications. In recent years, recruiting, hiring and retaining
employees with expertise in our industry and in the geographies where we operate has become increasingly
difficult as the demand for skilled professionals has increased. The loss of key personnel or our inability
to hire and retain skilled personnel could materially adversely affect the development of our products and
services and our business, financial condition, results of operations, cash flows and prospects.
Certain
of our products are used by customers in the production of vaccines and therapies, some of which represent
relatively new and still-developing modes of treatment. Unforeseen adverse events, negative clinical
outcomes, or increased regulatory scrutiny of these and their financial cost may damage public perception of
the safety, utility, or efficacy of these vaccines and therapies or other modes of treatment and may harm
our customers’ ability to conduct their business. Such events may negatively impact our revenue and
have an adverse effect on our performance.
Gene
therapy and nucleic acid vaccines remain relatively new and are under active development, with only a few
gene therapies and nucleic acid vaccines, including those for COVID-19, approved to date by regulatory
authorities. Public perception may be influenced by claims that gene therapy or nucleic acid vaccines are
unsafe or ineffective, and gene therapy may not gain the acceptance of the public or the medical community.
Following the release of nucleic acid COVID-19 vaccines, including those that incorporate our CleanCap®
products, segments of the population have criticized their safety and efficacy impacting vaccine demand. In
addition, ethical, social, legal and financial concerns about gene therapy and nucleic acid vaccines,
including COVID-19 vaccines, and more recent vaccine skepticism trends, notwithstanding medical evidence
about their effectiveness, could result in additional regulations or limitations or even prohibitions on
certain gene therapies or certain vaccine-related products. Our customers’ use of our products and
services in therapeutic and vaccine development programs for other (non-COVID-19-related) indications could
be impacted by more restrictive regulations or negative public perception, which could negatively affect our
business prospects, revenue and results of operation.
We
compete with life science, pharmaceutical and biotechnology companies who are substantially larger than we
are and potentially capable of developing new approaches that could make our products, services and
technology obsolete.
The
market for pharmaceutical, reagent, therapeutic and diagnostic products and services is intensely
competitive, rapidly evolving, significantly affected by new product introductions and other market
activities by industry participants and subject to rapid technological change. We also expect increased
competition as additional companies enter our market and as more advanced technologies become available. We
compete with other providers of outsourced biologics products and services. We also compete with the
in-house discovery, development and commercial manufacturing functions of pharmaceutical and biotechnology
companies. Many of our competitors are large, well-capitalized companies with significantly greater
resources and market share than we have. As a consequence, these competitors are able to spend more
aggressively on product and service development, marketing, sales and other initiatives than we can. Many of
these competitors also have:
•broader
name recognition;
•longer
operating histories and the benefits derived from greater economies of scale;
•larger
and more established distribution networks;
•additional
product and service lines and the ability to bundle products and services to offer higher discounts or other
incentives to gain a competitive advantage;
•more
experience in conducting research and development, manufacturing and marketing;
•more
experience in entering into collaborations or other strategic partnership arrangements; and
•more
financial, manufacturing and human resources to support product development, sales and marketing and patent
and other intellectual property litigation.
These
factors, among others, may enable our competitors to market their products and services at lower prices or
on terms more advantageous to customers than we can offer. Competition may result in price reductions,
reduced gross margins and loss of market share, any of which could have a material adverse effect on our
business, financial condition, results of operations, cash flows and prospects. Additionally, our current
and future competitors, including certain of our customers, may at any time develop additional products and
services that compete with our products and services and new approaches by these competitors may make our
products, services, technologies and methodologies obsolete or noncompetitive. We may not be able to compete
effectively against these organizations.
In
addition, to develop and market our new products, services, technologies and methodologies successfully, we
must accurately assess and meet customers’ needs, make significant capital expenditures, optimize our
development and manufacturing processes to predict and control costs, hire, train and retain the necessary
personnel, increase customer awareness and acceptance of our services, provide high-quality services in a
timely manner, price our products and services competitively and effectively integrate customer feedback
into our business planning. If we fail to create demand for our new products, services or technologies, our
future business could be harmed.
If
our products and services do not perform as expected or the reliability of the technology on which our
products and services are based is questioned, we could experience lost revenue, delayed or reduced market
acceptance of our products and services, increased costs and damage to our reputation.
Our
success depends on the market’s confidence that we can provide reliable, high-quality life science
reagents. We believe that customers in our target markets are likely to be particularly sensitive to product
defects and errors. Our reputation and the public image of our products, services and technologies may be
impaired if our products or services fail to perform as expected.
Although
our products are tested prior to shipment, defects or errors could nonetheless occur. Our operating results
depend on our ability to execute and, when necessary, improve our quality management strategy and systems
and our ability to effectively train and maintain our employee base with respect to quality management. A
failure of our quality control systems could result in problems with facility operations or preparation or
provision of products. In each case, such problems could arise for a variety of reasons, including equipment
malfunction, failure to follow specific protocols and procedures, problems with raw materials or
environmental factors and damage to, or loss of, manufacturing operations. Such problems could affect
production of a particular batch or series of batches of products, requiring the destruction of such
products or a halt of facility production altogether. Furthermore, some of the products that we manufacture
are subsequently incorporated into products that are sold by other life sciences companies and we have no
control over the manufacture and production of those products.
In
addition, in the event we, or our suppliers, fail to meet required quality standards and if our products
experience, or are perceived to experience, a material defect or error, our products could be recalled or we
may be unable to timely deliver products to our customers, which in turn could damage our reputation for
quality and service. In the past, certain of our custom mRNA and CleanCap® reagent products have been
sold with insufficient capping efficiency or with incorrect transcription instructions. Additionally,
several lots of our host cell protein (“HCP”) enzyme-linked immunosorbent assay
(“ELISA”) biologics safety testing kits have experienced a possible instability drift and
decrease in accuracy. Although we have taken steps to improve our quality review, product documentation and
reference testing procedures, we cannot guarantee that we will not experience quality assurance issues with
our products in the future. Any such failure could, among other things, lead to increased costs, delayed or
lost revenue, delayed market acceptance, damaged reputation, diversion of development resources, legal
claims, reimbursement to customers for lost drug product, starting materials and active pharmaceutical
ingredients, other customer claims, damage to and possibly termination of existing customer relationships,
increased insurance costs, time and expense spent investigating the cause and, depending on the cause,
similar losses with respect to other batches or products, any of which could harm our business, financial
condition, results of operations, cash flows and prospects. Such defects or errors could also narrow the
scope of the use of our products, which could hinder our success in the market.
Even
after any underlying concerns or problems are resolved, any lingering concerns in our target markets
regarding our technology or any manufacturing defects or performance errors in our products or services
could continue to result in lost revenue, delayed market acceptance, damage to our reputation and claims
against us.
In
addition, we may be unable to maintain the quality, reliability, robustness and expected turnaround times of
our products and services to continue to satisfy customer demand as we grow. To effectively manage our
growth, we must continue to improve our operational, manufacturing and quality control systems and processes
and other aspects of our business and continue to effectively expand, train and manage our personnel. The
time and resources required to improve our existing systems and procedures, implement new systems and
procedures and to adequately staff such existing and new systems and procedures is uncertain, and failure to
complete this in a timely and efficient manner could adversely affect our operations and negatively impact
our business and financial results. We may need to purchase additional equipment, some of which can take
several months or more to procure, set up and validate, establish new production processes and increase our
personnel levels to meet increased demand. There can be no assurance that any of these increases in scale,
personnel expansion or equipment or process enhancements will be successfully implemented, or that we will
have adequate space, including in our laboratory and production facilities, to accommodate such required
expansion. Failure to manage this growth or transition could result in delays in turnaround times, higher
product costs, declining product quality, deteriorating customer service and slower responses to competitive
challenges. A failure in any one of these areas could make it difficult for us to meet market expectations
for our products and services and could damage our reputation and our business, financial condition, results
of operations, cash flows and prospects could be adversely affected.
Our
products are highly complex and are subject to quality control requirements.
Whether
a product is produced by us or purchased from outside suppliers, it is subject to quality control
procedures, including the verification of stability and performance and, for certain products, additional
validation required by certain GMP that we voluntarily follow, European Conformity (“CE”)
marking and ISO 9001:2015 compliance, prior to final packaging. Certain of our products are manufactured
following the voluntary GMP quality standards of the International Council for Harmonisation’s GMP
Guide, comparable GMP principles for the European Union and customer-specific requirements. We believe these
products are exempt from compliance with the Food, Drug, and Cosmetic Act (“FDCA”) and the
current GMP (“cGMP”) regulations of the Food and Drug Administration (“FDA”), as our
products are further processed and incorporated into final drug products by our customers and we do not make
claims related to their safety or effectiveness. In the event we, or our suppliers, produce products that
fail to comply with required quality standards, we may incur delays in fulfilling orders, write-downs,
damages resulting from product liability claims and harm to our reputation.
If
we are unable to manufacture in specific quantities, our operating results will be harmed.
Our
revenue and other operating results depend in large part on our ability to manufacture and ship our products
in sufficient quantities. Any interruptions we experience in the manufacturing or shipping of our products
could delay our ability to recognize revenue in a particular quarter. Manufacturing problems can and do
arise, and as demand for our products increases, any such problems could have an increasingly significant
impact on our operating results. While we have not generally experienced problems with, or delays in, our
production capabilities that resulted in delays in our ability to ship finished products, there can be no
assurance that we will not encounter such problems in the future. We may not be able to quickly ship
products and recognize anticipated revenue for a given period if we experience significant delays in the
manufacturing process. In addition, we must maintain sufficient production capacity in order to meet
anticipated customer demand, and we may be unable to offset the associated fixed costs if orders slow, which
would adversely affect our operating margins. If we are unable to manufacture and ship our products
consistently, in sufficient quantities and on a timely basis, our revenue, cash flow, gross margins and our
other results of operations will be materially and adversely affected.
Natural
disasters, geopolitical unrest, war, terrorism, public health issues or other catastrophic events could
disrupt the supply, delivery or demand of products and services, as well as our sites, which could
negatively affect our operations and performance.
We
are subject to the risk of disruption by earthquakes, hurricanes, floods and other natural disasters, fire,
power shortages, geopolitical unrest, war (including any escalation of the ongoing military conflicts in
Ukraine or the Middle East), terrorist attacks and other hostile acts, public health issues, epidemics or
pandemics and other events beyond our control and the control of the third parties on which we depend. Any
of these catastrophic events, whether in the United States or abroad, may have a significant negative impact
on the global economy, our employees, facilities, partners, suppliers, distributors or customers, and could
decrease demand for our products and services, create delays and inefficiencies in our supply chain and make
it difficult or impossible for us to deliver products and services to our customers.
We
rely upon our internal manufacturing, packaging and distribution operations to produce many of the products
we sell and our warehouse facilities to store products pending sale. Any significant disruption of those
operations for any reason, such as labor disputes or social unrest, power interruptions, fire, hurricanes, a
public health crisis (such as a pandemic), earthquakes or other events beyond our control, could adversely
affect our sales and customer relationships and therefore adversely affect our
business
and results of operations. We have significant operations in California, near major earthquake faults, which
make us susceptible to earthquake risk.
In
addition, a catastrophic event that results in damage to specific equipment that would be difficult to
replace, the destruction or disruption of our research and production facilities or our critical business or
information technology systems would severely affect our ability to conduct normal business operations and,
as a result, our operating results would be adversely affected.
Strategic
transactions or acquisitions may require us to seek additional financing, which we may not be able to secure
on favorable terms, if at all.
We
plan to continue a strategy of growth and development for our business. To this end, we actively evaluate
various strategic transactions on an ongoing basis, including licensing or acquiring complementary products,
technologies or businesses that would complement our existing portfolio of products and services. In order
to complete such strategic transactions, we may need to seek additional financing to fund these investments
and acquisitions. Should we need to do so, we may not be able to secure such financing, or obtain such
financing on favorable terms, for reasons including rising interest rates and continued volatility and
uncertainty in the U.S. and global capital and credit markets. Our credit agreement also contains a number
of restrictive covenants that impose significant restrictions on our ability to make acquisitions or certain
other investments, as well as to incur additional indebtedness to finance such acquisitions or other
investments. In addition, future acquisitions may require the issuance or sale of additional equity, or
equity-linked securities, which may result in additional dilution to our shareholders.
Our
commercial success depends on the market acceptance of our life science reagents. Our reagents may not
achieve or maintain significant commercial market acceptance.
Our
commercial success is dependent upon our ability to continue to successfully market and sell our life
science reagents. Our ability to achieve and maintain commercial market acceptance of our products and
services and provide customers access to our life science reagents will depend on a number of factors,
including:
•our
ability to increase awareness of the capabilities of our technology and solutions;
•our
customers’ willingness to adopt new products, services and technologies;
•whether
our products and services reliably provide advantages over legacy and other alternative technologies and are
perceived by customers to be cost effective;
•our
ability to execute on our strategy to scale-up our CleanCap® technology to meet increasing demand and
provide channels to access our CleanCap® technology and life science reagents;
•the
rate of adoption of our products and services by biopharmaceutical companies, academic institutions and
others;
•the
relative reliability and robustness of our products and services as a whole and the components of our life
science offerings, including, for example, CleanCap® and our assays for detecting host cell
proteins;
•our
ability to develop new tools and solutions for customers;
•whether
competitors develop and commercialize products and services that provide comparable features and benefits at
scale;
•the
impact of our investments in product innovation and commercial growth;
•negative
publicity regarding our or our competitors’ products resulting from defects or errors; and
•our
ability to further validate our technology through research and accompanying publications.
We
cannot assure you that we will be successful in addressing these criteria or other criteria that might
affect the market acceptance of our products and services. If we are unsuccessful in achieving and
maintaining market acceptance of our products and services, our business, financial condition, results of
operations, cash flows and prospects could be adversely affected.
The
market may not be receptive to our new products and services upon their introduction.
We
expect a portion of our future revenue growth to come from introducing new products, including discovery
mRNA offerings and IVT enzyme offerings. The commercial success of all of our products and services will
depend upon their acceptance by the life science and biopharmaceutical industries. Some of the products and
services that we are developing are based upon new technologies or approaches. As a result, there can be no
assurance that these new products and services, even if successfully developed and introduced, will be
accepted by customers. If customers do not adopt our new products, services
and
technologies, our results of operations may suffer and, as a result, the market price of our Class A common
stock may decline.
It
may be difficult for us to implement our strategies for revenue growth in light of competitive
challenges.
We
face significant competition across many of our product lines. In addition, consolidation trends in the
pharmaceutical, biotechnology and diagnostics industries have served to create fewer customer accounts and
to concentrate purchasing decisions for some customers, resulting in increased pricing pressure on us.
Moreover, customers may believe that larger companies are better able to compete as sole source vendors, and
therefore prefer to purchase from such businesses. Failure to anticipate and respond to competitors’
actions may impact our future revenue and profitability.
Our
estimates of market opportunity and forecasts of market growth may prove to be inaccurate, and even if the
market in which we compete achieves the forecasted growth, our business could fail to grow at similar rates,
if at all.
Addressable
market estimates and growth forecasts are subject to significant uncertainty and are based on assumptions
and estimates that may not prove to be accurate. These estimates and forecasts are based on a number of
complex assumptions and third-party estimates and other business data, including assumptions and estimates
relating to our ability to generate revenue from existing products and services and the development of new
products and services. Our estimates and forecasts relating to the size and expected growth of our markets
may prove to be inaccurate. Even if the markets in which we compete meet our size estimates and growth
forecasts, our business could fail to grow at the rate we anticipate, if at all.
If
we are unable to successfully implement our strategic plan on a timely basis or at all, our business and
future result of operations may be adversely impacted.
Our
strategic plan was developed based upon market and technology trends that we currently believe present
revenue growth opportunities, and in turn, long-term shareholder value creation. Our strategic plan includes
a series of strategic priorities and cost realignment initiatives designed to drive growth and improve
operational efficiency. Our ability to achieve our strategic initiatives is subject to a number of risks,
including those discussed herein under the heading “Risks
Related to Our Business and Strategy,”
as well as challenges we face with executing multiple initiatives simultaneously. For example, our
commercial initiatives may not succeed, or we may lose market share due to challenges in choosing the right
products to develop or the right customers to target for these products, or integrating products of acquired
companies into our sales and marketing strategy. We cannot assure you that we will overcome the risks
associated with our strategic initiatives. If we fail to manage or overcome those risks, we may not realize
the intended benefits of our strategic plan and may incur additional expenses without related revenue
growth. Our business, financial position and results of operations will be adversely affected if we fail to
successfully implement our strategic initiatives or if we invest resources in a growth strategy that
ultimately proves to be unsuccessful.
Product
liability lawsuits against us could cause us to incur substantial liabilities, limit sales of our existing
products and limit commercialization of any products that we may develop.
Our
business exposes us to the risk of product liability claims that are inherent in the development,
production, distribution, and sale of biotechnology products. We face an inherent risk of product liability
exposure related to the use of certain of our products in our customers’ human clinical trials and
product liability lawsuits may allege that our products or services identified inaccurate or incomplete
information or otherwise failed to perform as designed. We may also be subject to liability for errors in, a
misunderstanding of or inappropriate reliance upon, the information we provide in the ordinary course of our
business activities. If any of our products harm people due to our negligence, willful misconduct, unlawful
activities or material breach, or if we cannot successfully defend ourselves against claims that our
products caused injuries, we could incur substantial liabilities. Regardless of merit or eventual outcome,
liability claims may result in the following, any of which could impact our business, financial condition,
results of operations, cash flows and prospects:
•decreased
demand for our products and any products that we may develop;
•injury
to our reputation;
•costs
to defend the related litigation;
•loss
of revenue; and
•the
inability to commercialize products that we may develop.
We
maintain product liability insurance, but this insurance is subject to deductibles, limits and exclusions
and may not fully protect us from the financial impact of defending against product liability claims or the
potential loss of revenue that may result. Any product liability claim brought against us, with or without
merit, could increase our insurance rates or prevent us from securing insurance coverage in the
future.
We
may be unable to efficiently manage growth opportunities as a larger and more geographically diverse
organization.
Our
strategic acquisitions, the continued expansion of our commercial sales operations and our organic growth
opportunities have increased the scope and complexity of our business. As a result, we will face challenges
inherent in efficiently managing a more complex business with an increased number of employees over large
geographic distances, including the need to implement appropriate systems, policies, benefits and compliance
programs. Our inability to manage successfully a geographically more diverse and substantially larger
organization could materially adversely affect our operating results.
Opportunistic
acquisitions may pose risks and challenges that could adversely affect our business, and we may not achieve
the anticipated benefits of acquisitions of businesses or technologies.
We
have made in the past, and may make in the future, selected opportunistic acquisitions of complementary
businesses, products, services or technologies. In January 2023, we completed the acquisition of Alphazyme,
LLC, an original equipment manufacturer provider of custom molecular biology enzymes, servicing customers in
the genetic analysis and nucleic acid synthesis markets to complement our nucleic acid production business,
in January 2025, we acquired the intellectual property and related assets of Molecular Assemblies, Inc.,
developers of enzymatic DNA synthesis technology to complement our nucleic acid production business, and in
February 2025, we completed the acquisition of Officinae Bio, S.R.L., a technology company with a
proprietary digital platform designed with AI and machine learning capabilities to support the biological
design of therapeutics to complement our nucleic acid production business. However, we may be unable to
continue to identify or complete promising acquisitions for many reasons, including competition among
buyers, the high valuations of businesses in our industry, the need for regulatory and other approvals and
the availability of capital, particularly during a period of disruption and volatility within the global
capital and credit markets.
Any
acquisition involves numerous risks, uncertainties and operational, financial, and managerial challenges,
including the following, any of which could adversely affect our business, financial condition, results of
operations, cash flows and prospects:
•difficulties
in integrating new operations, systems, technologies, products, services and personnel of acquired
businesses effectively and in a timely manner;
•difficulties
in implementing and maintaining controls, procedures and policies with respect to our financial accounting
systems, including disclosure controls and procedures and internal control over financial reporting, at
acquired businesses that, prior to the acquisition, had lacked such controls, procedures and
policies;
•lack
of synergies or the inability to realize expected synergies and cost-savings, including enhanced revenue,
technology, human resources, cost savings, operating efficiencies and other synergies;
•difficulties
in obtaining and verifying the financial statements and other business information of acquired
businesses;
•difficulties
in managing geographically dispersed operations, including risks associated with entering new or foreign
markets in which we have no or limited prior experience;
•underperformance
of any acquired technology, product, or business relative to our expectations and the price we paid;
•negative
near-term impacts on financial results after an acquisition, including acquisition-related earnings
charges;
•the
potential loss of key employees, customers, contractual relationships, and strategic partners of acquired
companies;
•declining
employee morale and retention issues affecting employees of businesses that we acquire, which may result
from changes in compensation, or changes in management, reporting relationships, future prospects or the
direction of the acquired business;
•claims
by terminated employees and shareholders of acquired companies or other third parties related to the
transaction;
•the
assumption or incurrence of historical liabilities, obligations and expenses of the acquired business,
including unforeseen and contingent or similar liabilities that are difficult to identify or accurately
quantify, or other litigation-related liabilities and regulatory actions;
•the
assumption or incurrence of additional debt obligations or expenses, or use of substantial portions of our
cash;
•the
issuance of equity or equity-linked securities to finance or as consideration for any acquisitions that
dilute the ownership of our shareholders;
•the
issuance of equity securities to finance or as consideration for any acquisitions may not be an option if
the price of our Class A common stock is low or volatile which could preclude us from completing any such
acquisitions;
•the
assumption of certain collaboration, strategic alliance and licensing arrangement may require us to
relinquish valuable rights to our technologies or products, or grant licenses on terms that are not
favorable to us;
•disruption
of our ongoing operations, diversion of management’s attention and company resources from existing
operations of the business, and the dedication of significant efforts and expense across all operational
areas, including sales and marketing, research and development, manufacturing, finance, legal and
information technologies;
•the
impairment of intangible assets as a result of technological advancements, or worse-than-expected
performance of acquired companies;
•the
need to later divest acquired assets at a loss if an acquisition does not meet our expectations;
•risks
associated with acquiring intellectual property, including potential disputes regarding acquired
companies’ intellectual property; and
•difficulties
relating to operating with increased leverage and incurring additional interest expense as a result of
financing acquisitions with additional indebtedness, which could make us more vulnerable to
downturns.
There
can be no assurance we will identify promising acquisition opportunities. Even if we do, there can be no
assurance that any of the acquisitions we have made, or that we may make, will be successful or will be, or
will remain, profitable. Our failure to successfully address the foregoing risks may prevent us from
achieving the anticipated benefits from any past or future acquisition in a reasonable time frame, or at
all.
Our
ability to use net operating loss and tax credit carryforwards and certain built-in losses to reduce future
tax payments is limited by provisions of the Internal Revenue Code, and it is possible that changes in laws
or certain transactions or a combination of certain transactions may result in material additional
limitations on our ability to use our net operating loss and tax credit carryforwards.
Sections
382 and 383 of the Internal Revenue Code of 1986, as amended, contain rules that limit the ability of a
company that undergoes an ownership change, which is generally any change in ownership of more than 50% of
its stock over a three-year period, to utilize its net operating loss and tax credit carryforwards and
certain built-in losses recognized in years after the ownership change. These rules generally operate by
focusing on ownership changes involving stockholders owning directly or indirectly 5% or more of the stock
of a company and any change in ownership arising from a new issuance of stock by the company. Generally, if
an ownership change occurs, the yearly taxable income limitation on the use of net operating loss and tax
credit carryforwards and certain built-in losses is equal to the product of the applicable long-term,
tax-exempt rate and the value of the company’s stock immediately before the ownership change. As a
result, following any such ownership change, we might be unable to offset our taxable income with losses, or
our tax liability with credits, before such losses and credits expire, in which event we could incur larger
federal and state income tax liabilities than we would have had we not experienced an ownership change. In
addition, under the 2017 Tax Cuts and Jobs Act (“TCJA”), tax losses generated in taxable years
beginning after December 31, 2017, may be utilized to offset no more than 80% of taxable income annually. On
March 27, 2020, the Coronavirus Aid Relief, and Economic Security Act (“CARES Act”) was signed
into law and changed certain provisions of the TCJA. Under the CARES Act, NOLs arising in taxable years
beginning after December 31, 2017 and before January 1, 2021 may be carried back to each of the five taxable
years preceding the tax year of such loss, but NOLs arising in taxable years beginning after December 31,
2020 may not be carried back. In addition, the CARES Act eliminates the limitation on the deduction of NOLs
to 80% of current year taxable income for taxable years beginning before January 1, 2021, but the 80%
limitation applies to tax years beginning after December 31, 2020. As such, we may not be able to realize a
tax benefit from the use of our NOLs.
We
may be required to record a significant charge to earnings if our goodwill and other amortizable intangible
assets, or other investments become impaired in the future.
We
are required under U.S. generally accepted accounting principles (“GAAP”) to test goodwill for
impairment at least annually and to review our goodwill, amortizable intangible assets and other assets
acquired through merger and acquisition activity for impairment when events or changes in circumstance
indicate the carrying value may not be recoverable. In assessing fair value, we make estimates and
assumptions about sales, operating margins, growth rates, and discount rates based on our business plans,
economic projections, anticipated future cash flows and marketplace data. There are inherent uncertainties
related to these factors and management’s judgment in applying these factors. Factors that could lead
to impairment of goodwill, amortizable intangible assets and other assets acquired via acquisitions include
significant adverse changes in the business climate and actual or projected operating results (affecting our
company as a whole or affecting any particular segment) and declines in the financial condition of our
business. For example, in connection with preparing our financial statements for the quarter ended September
30, 2024 and December 31, 2024, we identified certain indicators of
impairment
and recorded a goodwill impairment of $154.2 million related to the TriLink reporting unit and of $11.9
million related to the Alphazyme reporting unit, respectively, both within our nucleic acid production
segment.
We
continue to foresee challenges in the market and economy that could adversely impact our operations and to
the extent that forward-looking sales and operating assumptions are not achieved and are subsequently
reduced, additional impairment charges may result. Changes in the numerous variables associated with the
judgments, assumptions and estimates we make, in assessing the appropriate valuation of our goodwill and
other intangible assets of our reporting units, could in the future require us to record additional charges
to earnings if our goodwill, amortizable intangible assets or other investments become impaired. Any such
charge would adversely impact our consolidated financial results, and may cause a decline in our stock
price.
Changes
in accounting principles and guidance could result in unfavorable accounting charges or effects.
We
prepare our consolidated financial statements in accordance with GAAP. These principles are subject to
interpretation by the SEC and various bodies formed to create and interpret appropriate accounting
principles and guidance. A change in these principles or guidance, or in their interpretations, may have a
material effect on our reported results, as well as our processes and related controls, and may
retroactively affect previously reported results.
Our
revenue recognition and other factors may impact our financial results in any given period and make them
difficult to predict.
We
recognize revenue when our performance obligations have been satisfied in an amount that reflects the
consideration that we expect to receive in exchange for those performance obligations. Our revenue includes
revenue from the sale of manufactured products, including products that can be purchased out of a catalog
and custom manufactured products, and services, including custom antibody and assay development contracts,
antibody affinity extraction and stability and feasibility studies, as well as certain licensing and royalty
arrangements. The majority of our contracts include only one performance obligation, namely the delivery of
products, both custom and catalog, and services. We also recognize revenue from other contracts that may
include a combination of products and services, the provision of solely services, or from license fee
arrangements which may be associated with the delivery of product. Our application of the revenue
recognition accounting guidance with respect to the nature of future contractual arrangements could impact
the forecasting of our revenue for future periods, as both the mix of products and services we will sell in
a given period, as well as the size of contracts, is difficult to predict.
Furthermore,
the presentation of our financial results requires us to make estimates and assumptions that may affect
revenue recognition. In some instances, we could reasonably use different estimates and assumptions, and
changes in estimates may occur from period to period.
Given
the foregoing factors, comparing our revenue and operating results on a period-to-period basis may not be
meaningful, and our past results may not be indicative of our future performance.
Fluctuations
in our effective tax rate may adversely affect our results of operations and cash flows.
We
are subject to a variety of tax liabilities, including federal, state, foreign and other taxes such as
income, sales/use, payroll, withholding, and ad
valorem
taxes. Changes in tax laws or their interpretations could decrease our net income, the value of any tax loss
carryforwards, the value of tax credits recorded on our balance sheet and our cash flows, and accordingly
could have a material adverse effect on our business, financial condition, results of operations, cash flows
and prospects. In addition, our tax liabilities are subject to periodic audits by the relevant taxing
authority, which could increase our tax liabilities.
Our
business is subject to a number of environmental risks.
Our
manufacturing business involves the controlled use of hazardous materials and chemicals and is therefore
subject to numerous environmental and safety laws and regulations and to periodic inspections for possible
violations of these laws and regulations. The costs of compliance with environmental and safety laws and
regulations are significant. Any violations, even if inadvertent or accidental, of current or future
environmental and safety laws or regulations and the cost of compliance with any resulting order or fine
could adversely affect our operations.
Risks
Related to Our Reliance on Third Parties
We
depend on a limited number of customers for a high percentage of our revenue. If we cannot maintain our
current relationships with customers, fail to sustain recurring sources of revenue with our existing
customers, or if we fail to enter into new relationships, our future operating results will be adversely
affected.
Revenue
from our largest customers were 20.8%, 19.3% and 61.2% of total revenue for the years ended
December 31, 2024, 2023 and 2022, respectively. The revenue attributable to our top customers has
fluctuated in the past and may fluctuate in the future, which could have a material adverse effect on our
business, financial condition, results of operations, cash flows and prospects. In addition, the termination
of these relationships, including following any failure to renew a long-term contract, could result in a
temporary or permanent loss of revenue. See also “—The
extent and duration of our revenue associated with high-volume sales of CleanCap® for commercial phase
vaccine programs is uncertain and are dependent, in important respects, on factors outside our
control.”
Our
future success depends on our ability to maintain these relationships, to increase our penetration among
these existing customers and to establish new relationships. We engage in conversations with other companies
and institutions regarding potential commercial opportunities on an ongoing basis, which can be time
consuming. There is no assurance that any of these conversations will result in a commercial agreement, or
if an agreement is reached, that the resulting relationship will be successful. Speculation in the industry
about our existing or potential commercial relationships can be a catalyst for adverse speculation about us,
our products, our services and our technology, which can adversely affect our reputation and our business.
In addition, if our customers order our products or services, but fail to pay on time or at all, our
liquidity, financial condition, results of operations, cash flows and prospects could be materially and
adversely affected.
We
cannot assure investors that we will be able to further penetrate our existing markets or that our products
or services will gain adequate market acceptance. Any failure to increase penetration in our existing
markets would adversely affect our ability to improve our operating results.
We
rely on distribution arrangements to market and sell our products and services, including in certain
international markets, and our failure to maintain and successfully manage these arrangements or to renew or
identify and implement additional arrangements on favorable terms, if at all, may impair our ability to
effectively distribute and market our products and adversely impact our revenues and future results of
operations.
We
rely on certain distributors in order to market and sell our products
and services in in certain international markets, particularly our biologics safety testing products and
services in China. Our distributor in China accounted for 4.6%
of our total revenues in the year ended December 31, 2024. If we are unable to maintain this
distributor or enter into a similar arrangement with another distributor, or our current or future
distributors do not perform adequately, our revenues and results of operations would likely be adversely
impacted, at least temporarily. Additionally, changes in the inventory levels of our products owned and held
by our distributors can result in significant variability in our revenues. Furthermore, our revenues from
such distributors could be negatively impacted by macroeconomic conditions specific to the geographic
markets in which our products and services are marketed and sold, geopolitical risks and other risks
described below under “We
are subject to financial, operating, legal and compliance risks associated with global
operations.”
We
may pursue additional arrangements regarding the sales and marketing and distribution of one or more of our
products and services, including if we intend to grow our business internationally in certain geographic
markets, and the success of our strategic initiatives and our future revenue growth may depend, in part, on
our ability to enter into and maintain arrangements with other companies having sales, marketing and
distribution capabilities and the ability of such companies to successfully market and sell any such
products and services. Any failure to enter into such arrangements and marketing alliances on favorable
terms, if at all, could delay or impair our ability to distribute or market our products and services and
could increase our costs of distribution and marketing.
Our
use of distribution arrangements and marketing alliances to commercialize our products and services subject
us to a number of risks, including the following:
•we
may be required to relinquish important rights to our products;
•we
may not be able to control the amount and timing of resources that our distributors or collaborators may
devote to the distribution or marketing of our products;
•our
distributors or collaborators may experience financial difficulties; and
•business
combinations or significant changes in a collaborator’s business strategy may adversely affect a
collaborator’s willingness or ability to complete its obligations under any arrangement.
We
rely on a limited number of suppliers or, in some cases, sole suppliers, for some of our raw materials and
may not be able to find replacements or immediately transition to alternative suppliers.
Certain
of our raw materials are sourced from a limited number of suppliers and some materials, including a
proprietary DNA reagent, certain packaging materials, specific cell lines for Cygnus Technologies’
operations and certain raw materials used in our nucleic acid production products, as well as those raw
materials sold under the Glen Research brand, are sole sourced. Delays or difficulties in securing these raw
materials or other laboratory materials could result in an interruption in our production operations if we
cannot obtain an acceptable substitute. In recent years, global supply chains have faced challenges,
including material availability, global logistics delays and constraints arising from, among other things,
the transportation capacity of ocean shipping containers. More recently, geopolitical instability and U.S.
foreign trade policy, including the imposition or threatened imposition of tariffs or other trade
restrictions, could increase macroeconomic uncertainty at a global level and lead to supply chain
constraints and delays. Any interruption of our supply chain could significantly affect our business,
financial condition, results of operations, cash flows and prospects. While we may identify other suppliers,
raw materials furnished by such replacement suppliers may require us to alter our production operations or
perform extensive validations, which may be time consuming and expensive. There can be no assurance that we
will be able to secure alternative materials and revalidate them without experiencing interruptions in our
workflow. If we should encounter delays or difficulties in obtaining raw materials, our business, financial
condition, results of operations, cash flows and prospects could be adversely affected.
We
depend on a stable and adequate supply of quality raw materials from our suppliers, and price increases or
interruptions of such supply could have an adverse impact on our business, financial condition, results of
operations, cash flows and prospects.
Our
operations depend upon our ability to obtain raw materials at reasonable prices. Cost and wage inflation,
supply disruptions and logistics capacity constraints have increased in the past, or may increase in the
future, our costs to manufacture and distribute our products and services. If we are unable to obtain the
materials we need at a reasonable price due to inflationary pressures or other factors, we may not be able
to produce certain of our products at marketable prices or at all, which could have a material adverse
effect on our results of operations.
Although
we believe that we have stable relationships with our existing suppliers, we cannot assure you that we will
be able to secure a stable supply of raw materials going forward. Our suppliers may not be able to keep up
with our pace of growth or may reduce or cease their supply of raw materials to us at any time. In addition,
we cannot assure you that our suppliers have obtained and will be able to obtain or maintain all licenses,
permits and approvals necessary for their operations or comply with all applicable laws and regulations, and
failure to do so by them may lead to interruption in their business operations, which in turn may result in
shortages of raw materials supplied to us. Some of our suppliers are based overseas and therefore may need
to maintain export or import licenses. If the supply of raw materials is interrupted, due to ongoing supply
chain disruptions or other factors, our business, financial condition, results of operations, cash flows and
prospects may be adversely affected.
Because
we rely heavily on third-party package-delivery services, a significant disruption in these services,
damages or losses sustained during shipping or significant increases in shipping costs could adversely
affect our business, financial condition, results of operations, cash flows and prospects.
We
ship a significant portion of our products to our customers through independent package delivery companies,
such as World Courier, FedEx, UPS and DHL. If one or more of these third-party package-delivery providers
were to experience a major work stoppage, preventing our products from being delivered in a timely fashion
or causing us to incur additional shipping costs we could not pass on to our customers, our costs could
increase and our relationships with certain of our customers could be adversely affected. In addition, if
one or more of these third-party package-delivery providers were to increase prices, and we were not able to
find comparable alternatives or make adjustments in our delivery network, our profitability could be
adversely affected. Furthermore, if one or more of these third-party package-delivery providers were to
experience performance problems or other difficulties, it could negatively impact our operating results and
our customers’ experience. In the past, some of our products have sustained serious damage in transit
such that they were no longer usable. Although we have taken steps to improve our packaging and shipping
containers, there is no guarantee our products will not become damaged or lost in transit in the future. If
our products are damaged or lost in transit, it may result in a substantial delay in the fulfillment of our
customer’s order and, depending on the type and extent of the damage, it may result in a substantial
financial loss. If our products are not delivered in a timely fashion or are damaged or lost during the
delivery process, our customers could become dissatisfied and cease using our products or our services,
which would adversely affect our business, financial condition, results of operations, cash flows and
prospects.
Risks
Related to Laws and Regulations
Our
products could become subject to more onerous regulation by the FDA or other regulatory agencies in the
future, which could increase our costs and delay or prevent commercialization of our products, thereby
materially and adversely affecting our business, financial condition, results of operations, cash flows and
prospects.
We
make certain of our products available to customers as research-use-only (“RUO”) products. RUO
products are regulated by the FDA as medical devices, and include in
vitro
diagnostic products in the laboratory research phase of development that are being shipped or delivered for
an investigation that is not subject to the FDA’s investigational device exemption requirements.
Although medical devices are subject to stringent FDA oversight, products that are intended for RUO and are
labeled as RUO are exempt from compliance with most FDA requirements, including premarket clearance or
approval, manufacturing requirements, and others. A product labeled RUO but which is actually intended for
clinical diagnostic use may be viewed by the FDA as adulterated and misbranded under the FDCA, and subject
to FDA enforcement action. The FDA has indicated that when determining the intended use of a product labeled
RUO, the FDA will consider the totality of the circumstances surrounding distribution and use of the
product, including how the product is marketed and to whom. The FDA could disagree with our assessment that
our products are properly marketed as RUO, or could conclude that products labeled as RUO are actually
intended for clinical diagnostic use, and could take enforcement action against us, including requiring us
to stop distribution of our products until we are in compliance with applicable regulations, which would
reduce our revenue, increase our costs and adversely affect our business, prospects, results of operations
and financial condition. In the event that the FDA requires us to obtain marketing authorization of our RUO
products in the future, there can be no assurance that the FDA will grant any clearance or approval
requested by us in a timely manner, or at all.
Our
raw material products are manufactured following the voluntary quality standards of ISO 9001:2015. Our
GMP-grade raw material products follow ISO 9001:2015 standards, additional voluntary GMP quality standards
and customer specific requirements. We believe these raw material products, including our GMP-grade raw
material products, are exempt from compliance with the FDCA and the cGMP regulations of the FDA, as our
products are further processed by our customers and we do not make claims related to their safety or
effectiveness. We provide API products to customers for use in preclinical studies through and including
clinical trials. Our API products are manufactured following the principles detailed in the International
Council for Harmonisation (ICH) Q7, Good Manufacturing Practice Guide for Active Pharmaceutical Ingredients
(Section 19, APIs For Use in Clinical Trials) in order to comply with the applicable requirements of the
FDCA, and the comparable GMP principles for Europe; European Community, Part II, Basic Requirements for
Active Substances Used as Starting Materials (Section 19, APIs For Use in Clinical Trials). Manufacture of
APIs for use in clinical trials is regulated under § 501(a)(2)(B) of the FDCA, but is not subject to
the current GMP regulations in 21 CFR § 211 by operation of 21 CFR § 210. Our API products are
provided to customers under customer contracts that outline quality standards and product specifications. As
products advance through the clinical phases, requirements become more stringent and we work with customers
to define and agree on requirements and risks associated with their product.
The
FDA could disagree with our assessment that our products are exempt from current GMP regulations. In
addition, the FDA could conclude that the raw material and API products we provide to our customers are
actually subject to the pharmaceutical or drug quality-related regulations for manufacturing, processing,
packing or holding of drugs or finished pharmaceuticals, and could take enforcement action against us,
including requiring us to stop distribution of our products until we are in compliance with applicable
regulations, which would reduce our revenue, increase our costs and adversely affect our business,
prospects, results of operations and financial condition. In the event that the FDA requires us to comply
with FDA regulations, for our raw material and API products in the future, including the FDA’s current
GMP regulations, there can be no assurance that the FDA will find our operations are in compliance in a
timely manner, or at all.
We
are subject to stringent privacy laws, information security laws, regulations, policies and contractual
obligations related to data privacy and security and changes in such laws, regulations, policies and
contractual obligations could adversely affect our business, financial condition, results of operations,
cash flows and prospects.
We
are subject to data privacy and protection laws and regulations that apply to the collection, transmission,
storage and use of proprietary information and personally identifiable information (“PII”),
which among other things, imposes certain requirements relating to the privacy, security and transmission of
certain individually identifiable information.
Numerous
other federal and state laws, including state security breach notification laws, state health information
privacy laws and federal and state consumer protection laws, govern the collection, use, disclosure and
security of personal information. These laws continue to change and evolve and are increasing in breadth and
impact. Failure to comply with any of these laws and regulations could result in enforcement action against
us, including fines, imprisonment of company officials and public censure, claims for damages by affected
individuals, damage to our reputation and loss of goodwill, any of which could have a material adverse
effect on our business, financial condition, results of operations, cash flows and prospects. Additionally,
if we
are
unable to properly protect the privacy and security of personal information, we could be found to have
breached our contracts.
Many
states in which we operate have laws that protect the privacy and security of personal information. For
example, the California Consumer Privacy Act of 2018 (“CCPA”), which increases privacy rights
for California residents and imposes obligations on companies that process their personal information, came
into effect on January 1, 2020. Among other things, the CCPA requires covered companies to provide new
disclosures to California consumers and provide such consumers new data protection and privacy rights,
including the ability to opt-out of certain sales of personal information. The CCPA provides for civil
penalties for violations, as well as a private right of action for certain data breaches that result in the
loss of personal information. Further, the California Privacy Rights Act (the “CPRA”), which
took effect on January 1, 2023 (with certain provisions having retroactive effect to January 1, 2022),
amended the CCPA. Amongst other things, the CPRA and eliminated the “employee exemption” under
the CCPA, makes a distinction between “personal information” and “sensitive personal
information,” imposing heightened protections for “sensitive personal information,” and
brings business-to-business transactions under its purview. These laws and others like it are yet to be
tested and may subject us to increased regulatory scrutiny, litigation, and overall risk. Further, there is
discussion in Congress of a new federal data protection and privacy law to which we would become subject, if
it is enacted.
Various
foreign countries in which we operate also have, or are developing, laws that govern the collection, use,
disclosure, security and cross-border transmission of personal information. For example, in the European
Union (the “EU”) and the United Kingdom, the collection and use of personal data is governed by
the provisions of the General Data Protection Regulation (“GDPR”), in addition to other
applicable laws and regulations. The GDPR came into effect in May 2018,and has resulted in, and will
continue to result in, significantly greater compliance burdens and costs for companies like us. Any data
security breach could require notifications to the data subject and/or owners under U.S. federal, U.S.
state, and/or international data breach notification laws and regulations. Other jurisdictions outside the
EU are similarly introducing or enhancing privacy and data security laws, rules and regulations, which could
increase our compliance costs and the risks associated with noncompliance. We cannot guarantee that we are,
or will be, in compliance with all applicable international regulations as they are enforced now or as they
evolve.
It
is possible that these laws may be interpreted and applied in a manner that is inconsistent with our
practices and our efforts to comply with the evolving data protection rules may be unsuccessful. We must
devote significant resources to understanding and complying with this changing landscape. Failure to comply
with federal, state and international laws regarding privacy and security of personal information could
expose us to penalties under such laws, orders requiring that we change our practices, claims for damages or
other liabilities, regulatory investigations and enforcement action, litigation and significant costs for
remediation, any of which could adversely affect our business. Even if we are not determined to have
violated these laws, government investigations into these issues typically require the expenditure of
significant resources and generate negative publicity, which have a material adverse effect on our business,
financial condition, results of operations, cash flows and prospects.
We
are subject to export and import control laws and regulations that could impair our ability to compete in
international markets or subject us to liability if we violate such laws and regulations.
We
are subject to U.S. export controls and sanctions regulations that restrict the shipment or provision of
certain products and services to certain countries, governments and persons. While we take precautions to
prevent our products and services from being exported in violation of these laws, we cannot guarantee that
the precautions we take will prevent violations of export control and sanctions laws. If we are found to be
in violation of U.S. sanctions or export control laws, it could result in substantial fines and penalties
for us and for the individuals working for us. We may also be adversely affected through other penalties,
reputational harm, loss of access to certain markets, or otherwise. Complying with export control and
sanctions regulations may be time consuming and may result in the delay or loss of sales opportunities or
impose other costs. Any change in export or import regulations, economic sanctions or related legislation,
or change in the countries, governments, persons or technologies targeted by such regulations, could result
in our decreased ability to export or sell certain products and services to existing or potential customers
in affected jurisdictions.
Changes
in political, economic or governmental regulations may reduce demand for our products and services or
increase our expenses.
We
compete in many markets in which we and our customers must comply with federal, state, local and
international regulations, such as environmental, health and safety and food and drug regulations. We
develop, configure and market our products and services to meet customer needs created by those regulations.
The U.S. and international healthcare industry is subject to changing political, economic and regulatory
influences that could significantly affect the drug development process, research and development costs and
the pricing and reimbursement for pharmaceutical products, and also may increase the likelihood of
legislative or regulatory changes that could impact us or our business operations. Any significant change in
regulations
could have an adverse effect on both our customers’ business and our business, which could result in
reduced demand for our products and services or increases in our expenses. For example, we provide products
and services used for basic research, raw materials used by biopharmaceutical customers for further
processing, and active pharmaceutical ingredients used for preclinical studies and clinical trials.
Changes
in the FDA’s regulation of the drug discovery and development process may have a negative impact on
the ability of our customers to conduct and fund clinical trials, which could have a material adverse effect
on the demand for the products and services we provide these customers. Additionally, the U.S. government
and governments worldwide have increased efforts to expand healthcare coverage while at the same time
curtailing and better controlling the increasing costs of healthcare. If cost-containment efforts limit our
customers’ profitability, they may decrease research and development spending, which could decrease
the demand for our products and services and materially adversely affect our growth prospects. Any of these
factors could harm our customers’ businesses, which, in turn, could materially adversely hurt our
business, financial condition, results of operations, cash flows and prospects.
We
are subject to financial, operating, legal and compliance risk associated with global operations.
We
engage in business globally, with approximately 51%, 51% and 62% of our revenue for the years ended
December 31, 2024, 2023 and 2022, respectively, coming from outside the U.S. In addition, one of our
strategies is to expand geographically, both through distribution and through direct sales. This subjects us
to a number of risks, including international economic, geopolitical, and labor conditions; currency
fluctuations; tax laws (including U.S. taxes on income earned by foreign subsidiaries); increased financial
accounting and reporting burdens and complexities; unexpected changes in, or impositions of, legislative or
regulatory requirements; failure of laws to protect intellectual property rights adequately; inadequate
local infrastructure and difficulties in managing and staffing international operations; delays resulting
from difficulty in obtaining export licenses for certain technology; new or increased tariffs (or potential
retaliatory actions taken in response thereto), quotas and other trade barriers and restrictions;
transportation delays; operating in locations with a higher incidence of corruption and fraudulent business
practices; and other factors beyond our control, including terrorism, war, natural disasters, climate change
and diseases.
The
application of laws and regulations implicating global transactions is often unclear and may at times
conflict. Compliance with these laws and regulations may involve significant costs or require changes in our
business practices that result in reduced revenue and profitability. Non-compliance could also result in
fines, damages, criminal sanctions, prohibited business conduct, and damage to our reputation. We incur
additional legal compliance costs associated with our global operations and could become subject to legal
penalties in foreign countries if we do not comply with local laws and regulations, which may be
substantially different from those in the U.S.
We
may expand our operations in countries with developing economies, where it may be common to engage in
business practices that are prohibited by anti-corruption and anti-bribery laws and regulations that apply
to us, such as the U.S. Foreign Corrupt Practices Act (“FCPA”), the U.S. Travel Act, and the UK
Bribery Act 2010, which prohibit improper payments or offers of payment to foreign governments and political
parties by us for the purpose of obtaining or retaining business. Although we implement policies and
procedures designed to ensure compliance with these laws, there can be no assurance that all of our
employees, contractors, distributors and agents, including those based in foreign countries where practices
which violate such U.S. laws may be customary, will comply with our internal policies. Any such
non-compliance, even if prohibited by our internal policies, could have an adverse effect on our business
and result in significant fines or penalties.
Our
activities are and will continue to be subject to extensive government regulation, which is expensive and
time consuming.
We
are subject to various local, state, federal, foreign and transnational laws and regulations, and, in the
future, any changes to such laws and regulations could adversely affect us.
We
provide products and services used for basic research, raw materials and life science reagents used by
biopharmaceutical customers for further processing, assays for biologics safety testing and active
pharmaceutical ingredients used for preclinical studies and clinical trials. The quality of our products and
services is critical to researchers looking to develop novel vaccines and therapies and for
biopharmaceutical customers who use our products as raw materials or who are engaged in preclinical studies
and clinical trials. Biopharmaceutical customers are subject to extensive regulations by the FDA and similar
regulatory authorities in other countries for conducting clinical trials and commercializing products for
therapeutic or diagnostic use. This regulatory scrutiny results in our customers imposing rigorous quality
requirements on us as their supplier through supplier qualification processes and customer contracts.
Additionally,
regulatory authorities and our customers may conduct scheduled or unscheduled periodic inspections of our
facilities to monitor our regulatory compliance or compliance with our quality agreements with our
customers. There are significant risks at each stage of the regulatory scheme for our customers.
Regulatory
agencies may in the future take action against us or our customers for failure to comply with applicable
regulations governing clinical trials and the development and testing of therapeutic products. Failure by us
or by our customers to comply with the requirements of these regulatory authorities, including without
limitation, remediating any inspectional observations to the satisfaction of these regulatory authorities,
could result in warning letters, product recalls or seizures, monetary sanctions, injunctions to halt
manufacture and distribution, restrictions on our operations, civil or criminal sanctions, or withdrawal of
existing or denial of pending approvals, including those relating to products or facilities. In addition,
such a failure could expose us to contractual or product liability claims, contractual claims from our
customers, including claims for reimbursement for lost or damaged active pharmaceutical ingredients, as well
as ongoing remediation and increased compliance costs, any or all of which could be significant.
We
are also subject to a variety of federal, state, local and international laws and regulations that govern,
among other things, the importation and exportation of products, the handling, transportation and
manufacture of substances that could be classified as hazardous, and our business practices in the U.S. and
abroad such as anti-corruption and anti-competition laws. Any noncompliance by us with applicable laws and
regulations or the failure to maintain, renew or obtain necessary permits and licenses could result in
criminal, civil and administrative penalties and could have an adverse effect on our results of
operations.
Increasing
scrutiny and changing expectations from investors, lenders, customers, government regulators and other
market participants with respect to our Environmental, Social and Governance (“ESG”) policies
and activities may impose additional costs on us or expose us to additional risks.
Companies
across all industries and around the globe are facing increasing scrutiny relating to their ESG policies,
initiatives and activities by investors, lenders, customers, government regulators and other market
participants. More recently, certain ESG policies, initiatives and activities have become politicized, with
ideologically opposing perspectives, such that companies may find themselves unable to satisfactorily
consider or address one stakeholder’s concerns without creating concerns among another set of
stakeholders with an opposing viewpoint.
If
we are unable to meet our ESG initiatives or evolving investor, industry, or customer expectations and
standards, we are perceived to have not responded adequately on any number of ESG matters, or we draw
scrutiny from certain people or groups with an opposing viewpoint, we risk damage to our brand and
reputation, adverse impacts to our ability to secure government contracts, decreased desirability of our
common stock to investors, or limited access to capital markets and other sources of financing..
There
is no guarantee that any ESG or sustainability goals set forth in our ESG initiatives will be achieved on
the desired timeframe or at all, and the achievement of any such goals may require the incurrence of
additional costs or the implementation of operational changes, any of which could adversely affect the
Company’s results of operations.
Additionally,
changes in legal and regulatory requirements related to ESG have been issued in the State of California and
the E.U., its Member States and other countries, particularly with respect to climate change, emission
reduction and environmental stewardship, amongst other regulatory efforts. As a result, we expect legal,
regulatory and reporting requirements related to ESG matters to continue to expand globally and increase our
costs of compliance.
Risks
Related to Our Intellectual Property and Technology
If
we are unable to obtain, maintain and enforce intellectual property protection for our current or future
products, or if the scope of our intellectual property protection is not sufficiently broad, our ability to
commercialize our products successfully and to compete effectively may be materially adversely
affected.
Our
success depends on our ability to obtain and maintain patent and other intellectual property protection in
the United States and other countries with respect to our current and future proprietary products. We rely
upon a combination of patents and trade secret protection to protect the intellectual property related to
our technology, manufacturing processes, and products. Our commercial success depends in part on obtaining
and maintaining patent and trade secret protection for our current and future products, if any, and the
methods used to manufacture them, as well as successfully defending and protecting such patents and trade
secrets against third-party challenges. Our ability to stop third parties from making, using, selling,
offering to sell or importing our products is dependent upon the extent to which we have rights under valid
and enforceable patents and other intellectual property that covers these activities.
The
patent prosecution process is expensive and time consuming, and we may not be able to file and prosecute all
necessary or desirable patent applications at a reasonable cost or in a timely manner or in all
jurisdictions where protection may be commercially advantageous. It is also possible that we may fail to
identify patentable aspects of our research and development output before it is too late to obtain patent
protection. In addition, we or our collaborators may only pursue, obtain or maintain patent protection in a
limited number of countries. There is no assurance that all potentially relevant prior art relating to our
patents and patent applications has been found. We may be unaware of prior art that could be used to
invalidate or narrow the scope of an issued patent or prevent our pending patent applications from issuing
as patents. This may be (1) because patent
applications
in the United States, Europe and many other non-U.S. jurisdictions are typically not published until 18
months after filing, or in some cases not at all, (2) because publications of discoveries in scientific
literature lag behind actual discoveries, and (3) because we cannot be certain that we or our licensors were
the first to make the inventions claimed in any of our owned or any in-licensed issued patents or pending
patent applications, or that we or our licensors were the first to file for protection of the inventions set
forth in our patents or patent applications. As a result, we may not be able to obtain or maintain
protection for certain inventions. Even if patents do successfully issue, such patents may not adequately
protect our intellectual property, provide exclusivity for our current or future products, prevent others
from designing around our claims or otherwise provide us with a competitive advantage. We cannot offer any
assurances about which, if any, patents will issue, the breadth of any such patents or whether any issued
patents will be found invalid or unenforceable or will be threatened by third parties. In addition, third
parties have challenged in the past and may further challenge in future the validity, enforceability,
ownership, inventorship or scope of any of our patents. Any successful challenge to any of our patents could
deprive us of rights necessary for the successful commercialization of our current or future products and
could impair or eliminate our ability to collect future revenue and royalties with respect to such products.
If any of our patent applications with respect to our current or future products fail to result in issued
patents, if their breadth or strength of protection is narrowed or threatened, or if they fail to provide
meaningful exclusivity or competitive position, it could dissuade companies from collaborating with us or
otherwise adversely affect our competitive position.
The
patent positions of life science companies can be highly uncertain and involve complex legal and factual
questions for which important legal principles remain unresolved. No consistent policy regarding the breadth
of claims allowed in life science patents has emerged to date in the United States. The standards applied by
the United States Patent and Trademark Office (the “USPTO”) and foreign patent offices in
granting patents are not always applied uniformly or predictably and can change. Additionally, the laws of
some foreign countries do not protect intellectual property rights to the same extent as the laws of the
United States, and many companies have encountered significant problems in protecting and defending such
rights in foreign jurisdictions. The legal systems of certain countries, particularly certain developing
countries, do not favor the enforcement of patents and other intellectual property rights, particularly
those relating to biotechnology, which could make it difficult for us to stop the infringement,
misappropriation, or other violation of our patents or other intellectual property, including the
unauthorized reproduction of our manufacturing or other know-how or the marketing of competing products in
violation of our intellectual property rights generally. Any of these outcomes could impair our ability to
prevent competition from third parties, which may have a material adverse effect on our business, financial
condition, results of operations, cash flows and prospects.
Further,
the existence of issued patents does not guarantee our right to practice the patented technology or
commercialize products covered by such a patent. Third parties may have or obtain rights to patents which
they may use to prevent or attempt to prevent us from practicing our patented technology or commercializing
our patented products. If any of these other parties are successful in obtaining valid and enforceable
patents, and establishing our infringement of those patents, we could be prevented from selling our products
unless we were able to obtain a license under such third-party patents, which may not be available on
commercially reasonable terms or at all. In addition, third parties may seek approval to market their own
products similar to or otherwise competitive with our products. In these circumstances, we may need to
defend or assert our patents, including by filing lawsuits alleging patent infringement. In any of these
types of proceedings, a court or agency of competent jurisdiction may find our patents invalid or
unenforceable. Our competitors and other third parties may also be able to circumvent our patents by
developing similar or alternative products in a non-infringing manner. Any of the foregoing could have a
material adverse effect on our business, financial condition, results of operations, cash flows and
prospects.
In
addition, competitors may use our technologies in jurisdictions where we have not obtained or are unable to
adequately enforce patent protection to develop their own products and further, may export otherwise
infringing products to territories where we have patent protection, but enforcement is not as strong as that
in the United States and Europe. These products may compete with our products, and our patents or other
intellectual property rights may not be effective or sufficient to prevent them from competing with us.
Proceedings to enforce our patent rights, whether or not successful, could result in substantial costs and
divert our efforts and attention from other aspects of our business, could put our patents at risk of being
invalidated or held unenforceable, or interpreted narrowly and our patent applications at risk of not
issuing, and could provoke third parties to assert claims against us. We may not prevail in any lawsuits
that we initiate, and the damages or other remedies awarded, if any, may not be commercially meaningful.
Accordingly, our efforts to enforce our intellectual property rights around the world may be inadequate to
obtain a significant commercial advantage from the intellectual property that we develop, acquire or
license.
Intellectual
property that we own or in-license may be subject to a reservation of rights by one or more third parties.
For example, one of our patents is co-owned with third parties and some of our patent rights in the future
may be co-owned with third parties. If we are unable to obtain an exclusive license to any such third-party
co-owners’ interest in such patent rights, such co-owners may be able to license their rights to other
third parties, including our competitors, and our competitors could market competing products and
technology. In addition, we may need the cooperation of any such co-owners of such patent rights in order to
enforce such patent rights against third parties, and such cooperation may not be provided to us. Any of the
foregoing
could have a material adverse effect on our competitive position, business, financial conditions, results of
operations, and prospects.
Moreover,
the research resulting in certain of our patents and technology was funded in part by the U.S. government.
As a result, the U.S. government has certain rights to such patent rights and technology, which include
march-in rights. When new technologies are developed with government funding, in order to secure ownership
of such patent rights, the recipient of such funding is required to comply with certain government
regulations, including timely disclosing the inventions claimed in such patent rights to the U.S. government
and timely electing title to such inventions. Additionally, the U.S. government generally obtains certain
rights in any resulting patents, including a nonexclusive license authorizing the government to use the
invention or to have others use the invention on its behalf. Accordingly, we or our licensors have granted
the U.S. government a nonexclusive, nontransferable, irrevocable, paid-up license to practice or have
practiced for or on behalf of the United States, the inventions described in the patents and patent
applications relating to such inventions. If the U.S. government decides to exercise these rights, it is not
required to engage us as its contractor in connection with doing so. The government’s rights may also
permit it to disclose our confidential information to third parties and to exercise march-in rights to use
or allow third parties to use such government-funded technology. The government can exercise its march-in
rights if it determines that action is necessary because we fail to achieve practical application of the
government-funded technology, or because action is necessary to alleviate health or safety needs, to meet
requirements of federal regulations, or to give preference to U.S. industry. In addition, our rights in such
inventions may be subject to certain requirements to manufacture products embodying such inventions in the
United States. If we fail to comply with those requirements, we could lose our ownership of or other rights
to any patents subject to such regulations. Any exercise by the government of any of the foregoing rights or
by any third party of its reserved rights could have a material adverse effect on our competitive position,
business, financial condition, results of operations, and prospects.
Furthermore,
patents have a limited lifespan. In the United States, the unextended expiration of a patent is generally 20
years after its non-provisional application filing date. Various extensions may be available, however, the
life of a patent and the protection it affords is limited. Given the amount of time required for the
development, testing, regulatory review and approval of new products, our patents protecting such candidates
might expire before or shortly after such candidates are commercialized. If we encounter delays in obtaining
regulatory approvals, the period of time during which we could market a product under patent protection
could be further reduced. Even if patents covering our future products are obtained, once such patents
expire, we may be vulnerable to competition from similar products. The launch of a similar version of one of
our products would likely result in an immediate and substantial reduction in the demand for our product. As
a result, our patent portfolio may not provide us with sufficient rights to exclude others from
commercializing products similar or identical to ours. Any of the foregoing could have a material adverse
effect on our business, financial condition, results of operations, cash flows and prospects.
Our
internal computer systems, or those of our customers, collaborators or other contractors, have been and may
in the future be subject to cyber-attacks or security breaches, which could result in a material disruption
of our product development programs or otherwise adversely affect our business, financial condition, results
of operations, cash flows and prospects.
Despite
the implementation of security measures, our internal computer systems and those of our customers are
vulnerable to damage from computer viruses and unauthorized access. Cyber-attacks are increasing in their
frequency, sophistication and intensity, and have become increasingly difficult to detect. Cyber-attacks
could include the deployment of harmful malware, ransomware, denial-of-service attacks, social engineering
and other means to affect service reliability and threaten the confidentiality, integrity and availability
of information. Cyber-attacks also could include phishing attempts or e-mail fraud to cause unauthorized
payments or information to be transmitted to an unintended recipient. A material cyber-attack or security
breach could cause interruptions in our operations and could result in a material disruption of our business
operations, damage to our reputation, financial condition, results of operations, cash flows and
prospects.
In
the ordinary course of our business, we collect and store sensitive data, including, among other things,
personally identifiable information about our employees, intellectual property, and proprietary business
information. Any cyber-attack or security breach that leads to unauthorized access, use or disclosure of
personal or proprietary information could harm our reputation, cause us not to comply with federal and/or
state breach notification laws and foreign law equivalents and otherwise subject us to liability under laws
and regulations that protect the privacy and security of personal information. In addition, we could be
subject to risks caused by misappropriation, misuse, leakage, falsification or intentional or accidental
release or loss of information maintained in the information systems and networks of our company and our
vendors, including personal information of our employees, and company and vendor confidential data. In
addition, outside parties have previously attempted and may in the future attempt to penetrate our systems
or those of our vendors or fraudulently induce our personnel or the personnel of our vendors to disclose
sensitive information in order to gain access to our data and/or systems or make unauthorized payments to
third parties. Like other companies, we have on occasion experienced, and will continue to
experience,
data security incidents involving access to company data, unauthorized payments and threats to our data and
systems, including malicious codes and viruses, phishing, business email compromise attacks, or other
cyber-attacks. The number and complexity of these threats continue to increase over time. If a material
breach of our information technology systems or those of our vendors occurs, the market perception of the
effectiveness of our security measures could be harmed and our reputation and credibility could be
damaged.
We
could be required to expend significant amounts of money and other resources to respond to these threats or
breaches and to repair or replace information systems or networks and could suffer financial loss or the
loss of valuable confidential information. In addition, we could be subject to regulatory actions and/or
claims made by individuals and groups in private litigation involving privacy issues related to data
collection and use practices and other data privacy laws and regulations, including claims for misuse or
inappropriate disclosure of data, as well as unfair or deceptive practices. Although we develop and maintain
systems and controls designed to prevent these events from occurring, and we have a process to identify and
mitigate threats, the development and maintenance of these systems, controls and processes is costly and
requires ongoing monitoring and updating as technologies change and efforts to overcome security measures
become increasingly sophisticated. Moreover, despite our efforts, the possibility of these events occurring
cannot be eliminated entirely and there can be no assurance that any measures we take will prevent
cyber-attacks or security breaches that could adversely affect our business, financial condition, results of
operations, cash flows and prospects.
If
we are unable to protect the confidentiality of our proprietary information, the value of our technology and
products could be materially adversely affected.
We
also may rely on trade secrets to protect our technology, especially where we do not believe patent
protection is appropriate or obtainable. To maintain the confidentiality of trade secrets and other
proprietary information, we enter into confidentiality agreements with our employees, consultants,
contractors, collaborators, CDMOs, CROs and others upon the commencement of their relationships with us.
These agreements require that all confidential information developed by the individual or entity or made
known to the individual or entity by us during the course of the individual’s or entity’s
relationship with us be kept confidential and not disclosed to third parties. Our agreements with employees
as well as our personnel policies also generally provide that any inventions conceived by the individual in
the course of rendering services to us shall be our exclusive property or that we may obtain full rights to
such inventions at our election. However, trade secrets are difficult to protect. Although we use reasonable
efforts to protect our trade secrets, our employees, consultants, contractors, collaborators, CDMOs, CROs
and others may unintentionally or willfully disclose our information to competitors. We also face the risk
that present or former employees could continue to hold rights to intellectual property used by us, demand
the registration of intellectual property rights in their name, and seek payment of damages for our use of
such intellectual property.
Enforcing
a claim that a third party illegally obtained or is using any of our trade secrets is expensive and time
consuming, and the outcome is unpredictable. We may not have adequate remedies in the event of unauthorized
use or disclosure of our trade secrets or other proprietary information in the case of a breach of any such
agreements and our trade secrets and other proprietary information could be disclosed to third parties,
including our competitors. Many of our partners also collaborate with our competitors and other third
parties. The disclosure of our trade secrets to our competitors, or more broadly, would impair our
competitive position and may materially harm our business, financial condition, results of operations, cash
flows and prospects. Costly and time-consuming litigation could be necessary to enforce and determine the
scope of our rights, and failure to maintain trade secret protection could adversely affect our competitive
business position. The enforceability of confidentiality agreements may vary from jurisdiction to
jurisdiction. Courts outside the United States are sometimes less willing to protect trade secrets.
Moreover, our competitors may independently develop substantially equivalent or superior knowledge, methods
and know-how, and the existence of our own trade secrets affords no protection against such independent
discovery.
We
may become involved in lawsuits to protect or enforce our patents, which could be expensive, time-consuming
and unsuccessful and could result in a court or administrative body finding our patents to be invalid or
unenforceable.
Even
if the patent applications we own or license are issued, third parties may challenge or infringe upon our
patents. To counter infringement, we may be required to file infringement claims, which can be expensive and
time-consuming. In patent litigation in the United States, defendant counterclaims alleging invalidity or
unenforceability are commonplace. Grounds for a validity challenge could be an alleged failure to meet any
of several statutory requirements, including novelty, non-obviousness (or inventive step), written
description or enablement. In addition, patent validity challenges may, under certain circumstances, be
based upon non-statutory obviousness-type double patenting, which, if successful, could result in a finding
that the claims are invalid for obviousness-type double patenting or the loss of patent term if a terminal
disclaimer is filed to obviate a finding of obviousness-type double patenting. Grounds for an
unenforceability assertion could be an allegation that someone connected with prosecution of the patent
withheld information material to patentability from the USPTO, or made a misleading statement, during
prosecution.
Third
parties have raised similar claims in the past, and may raise similar claims in the future, before
administrative bodies in the United States or abroad, even outside the context of litigation. Such
mechanisms include re-examination, post-grant review, inter
partes
review, interference proceedings, derivation proceedings, and equivalent proceedings in foreign
jurisdictions (e.g., opposition proceedings). Such proceedings could result in the revocation or
cancellation of or amendment to our patents in such a way that they no longer cover our current or future
products or provide any competitive advantage. The outcome following legal assertions of invalidity and
unenforceability is unpredictable. If a third party were to prevail on a legal assertion of invalidity or
unenforceability, we could lose part or all of the patent protection on one or more of our current or future
products, which could result in our competitors and other third parties using our technology to compete with
us. Such a loss of patent protection could have a material adverse impact on our business, financial
condition, results of operations, cash flows and prospects.
Interference
proceedings, or other similar enforcement and revocation proceedings, provoked by third parties or brought
by us may be necessary to determine the priority of inventions with respect to our patents or patent
applications. An unfavorable outcome could require us to cease using the related technology or to attempt to
license rights to it from the prevailing party. Our business could be harmed if the prevailing party does
not offer us a license on commercially reasonable terms. Our defense of litigation or interference
proceedings may fail and, even if successful, may result in substantial costs and distract our management
and other employees. We may not be able to prevent, alone or with our licensors, infringement,
misappropriation or other violation of our intellectual property rights, particularly in countries where the
laws may not protect those rights as fully as in the United States.
In
an infringement proceeding, even one initiated by us, there is a risk that a court will decide that our
patents are not valid and that we do not have the right to stop the other party from using the inventions
they describe. There is also the risk that, even if the validity of such patents is upheld, the court will
refuse to stop the other party on the ground that such other party’s activities do not infringe our
rights to these patents.
Some
of our competitors may be able to sustain the costs of complex patent litigation more effectively than we
can because they have substantially greater resources. In addition, any uncertainties resulting from the
initiation and continuation of any litigation could have a material adverse effect on our ability to raise
the funds necessary to continue our operations. In addition, patent holding companies that focus solely on
extracting royalties and settlements by enforcing patent rights may target us, especially as we gain greater
visibility and market exposure as a public company.
An
adverse outcome in a litigation or proceeding involving our patents could limit our ability to assert our
patents against competitors, affect our ability to receive royalties or other licensing consideration from
our licensees, and may curtail or preclude our ability to exclude third parties from making, using and
selling similar or competitive products. Any of these occurrences could have a material adverse effect on
our business, financial condition, results of operations, cash flows and prospects.
If
we are sued for infringing, misappropriating, or otherwise violating intellectual property rights of third
parties, such litigation could be costly and time consuming and could prevent or delay us from developing or
commercializing our current or future products.
Our
products may infringe on, or be accused of infringing on, one or more claims of an issued patent or may fall
within the scope of one or more claims in a published patent application that may be subsequently issued and
to which we do not hold a license or other rights.
Because
patent applications in the United States and many foreign jurisdictions are typically not published until 18
months after filing, or in some cases not at all, and publications in the scientific literature often lag
behind actual discoveries, we cannot be certain that others have not filed patent applications for
technology covered by our issued patents or our pending applications, or that we were the first to invent
the technology. Others, including our competitors, may have filed, and may in the future file, patent
applications covering technology similar to ours. Any such patent application may have priority over our
patent applications or patents, which could further require us to obtain rights to issued patents by others
covering such technologies. If another party has filed a U.S. patent application on inventions similar to
ours, we may have to participate in an interference proceeding declared by the USPTO to determine priority
of invention in the United States. The costs of these proceedings could be substantial, and it is possible
that such efforts would be unsuccessful if, unbeknownst to us, the other party had independently arrived at
the same or similar invention prior to our own invention, resulting in a loss of our U.S. patent position
with respect to such inventions.
Additionally,
pending patent applications that have been published can, subject to certain limitations, be later amended
in a manner that could cover our current or future products or the use of our current or future products.
After issuance, the scope of patent claims remains subject to construction based on interpretation of the
law, the written disclosure in a patent and the patent’s prosecution history. Our interpretation of
the relevance or the scope of a patent or a pending application may be incorrect. In addition, third parties
may obtain patents in the future and claim that use of our technologies infringes upon these
patents.
These third parties could bring claims against us or our collaborators that would cause us to incur
substantial expenses and, if successful against us, could cause us to pay substantial damages.
The
life sciences industry has produced a proliferation of patents, and it is not always clear to industry
participants, including us, which patents cover various types of products or methods of use. Because the
patent granting process is imperfect, the manufacture, distribution, or sale of our products may require us
to challenge intellectual property rights by third parties that we believe to have been improperly granted.
The coverage of patents is subject to interpretation by the courts, and the interpretation is not always
uniform. If we are sued for patent infringement, we would need to demonstrate that our products or methods
of use either do not infringe the patent claims of the relevant patent and/or that the patent claims are
invalid or unenforceable, and we may not be able to do this. Proving invalidity, in particular, is difficult
since it requires a showing of clear and convincing evidence in trial court litigation to overcome the
presumption of validity enjoyed by issued patents. Third parties have, and may in the future have, U.S. and
non-U.S. issued patents and pending patent applications that may cover our current or future products. Such
a third party may claim that we or our manufacturing or commercialization partners are using inventions
covered by the third party’s patent rights and may go to court or a tribunal to stop us from engaging
in our normal operations and activities, including making or selling our current or future products. In the
event that any of these patent rights were asserted against us, we believe that we have defenses against any
such action, including that such patents would not be infringed by our current or future products and/or
that such patents are not valid. However, if any such patent rights were to be asserted against us and our
defenses to such assertion were unsuccessful, unless we obtain a license to such patents, we could be liable
for damages, which could be significant and include treble damages and attorneys’ fees if we are found
to willfully infringe such patents, and we could be precluded from commercializing any future products that
were ultimately held to infringe such patents, any of which could have a material adverse effect on our
business, financial condition, results of operations, cash flows and prospects.
If
we are found to infringe the patent rights of a third party, or in order to avoid potential claims, we or
our collaborators may choose or be required to seek a license from a third party and be required to pay
license fees or royalties or both. These licenses may not be available on reasonable terms, or at all. In
particular, any of our competitors that control intellectual property that we are found to infringe may be
unwilling to provide us a license under any terms. Even if we or our collaborators were able to obtain a
license, the rights may be nonexclusive, which could result in our competitors gaining access to the same
intellectual property. Ultimately, we could be prevented from commercializing a product, or be forced to
cease some aspect of our business operations, if, as a result of actual or threatened patent infringement
claims, we or our collaborators are unable to enter into licenses on acceptable terms. In addition, we could
be found liable for monetary damages, including treble damages and attorneys’ fees if we are found to
have willfully infringed a patent. Further, if a patent infringement suit is brought against us or our
third-party service providers and if we are unable to successfully obtain rights to required third-party
intellectual property, we may be required to expend significant time and resources to redesign our current
or future products, or to develop or license replacement technology, all of which may not be feasible on a
technical or commercial basis, and may delay or require us to abandon our development, manufacturing or
sales activities relating to our current or future products. A finding of infringement could prevent us from
commercializing our future products or force us to cease some of our business operations, which could harm
our business. Claims that we have misappropriated the confidential information or trade secrets of third
parties could have a similar negative impact on our business. Any of the foregoing could have a material
adverse effect on our business, financial condition, results of operations, cash flows and prospects.
Intellectual
property litigation and other proceedings could cause us to spend substantial resources and distract our
personnel from their normal responsibilities.
Even
if resolved in our favor, intellectual property litigation or other legal proceedings relating to our, our
licensors’ or other third parties’ intellectual property claims may cause us to incur
significant expenses and could distract our personnel from their normal responsibilities. Patent litigation
and other proceedings may also absorb significant management time. If not resolved in our favor, litigation
may require us to pay any portion of our opponents’ legal fees. Such litigation or proceedings could
substantially increase our operating losses and reduce the resources available for development activities or
any future sales, marketing, or distribution activities. We may not have sufficient financial or other
resources to conduct such litigation or proceedings adequately. Our competitors or other third parties may
be able to sustain the cost of such litigation and proceedings more effectively than we can because of their
substantially greater resources. Uncertainties resulting from our participation in patent litigation or
other proceedings could have a material adverse effect on our ability to compete in the marketplace.
Furthermore, because of the substantial amount of discovery required in certain jurisdictions in connection
with intellectual property litigation, there is a risk that some of our confidential information could be
compromised by disclosure during this type of litigation. There could also be public announcements of the
results of hearings, motions or other interim proceedings or developments. If securities analysts or
investors perceive these results to be negative, the perceived value of our current or future products or
intellectual property could be diminished. Accordingly, the market price of our Class A common stock may
decline. Uncertainties resulting from the initiation and continuation of patent litigation or other
proceedings could have a material adverse effect on our business, financial condition, results of
operations, and prospects.
If
we fail to comply with our obligations under any license agreements, disagree over contract interpretation,
or otherwise experience disruptions to our business relationships with our licensors, we could lose
intellectual property rights that are necessary to our business.
We
rely, in part, on intellectual property and technology which we have in-licensed. We may also need to obtain
additional licenses in the future to advance our research or allow commercialization of our future products
and it is possible that we may be unable to do so at a reasonable cost or on reasonable terms, if at all.
Moreover, such licenses may not provide exclusive rights to use such intellectual property and technology in
all relevant fields of use and in all territories in which we may wish to develop or commercialize our
future products.
In
addition, our existing license agreements impose, and any future license agreements we enter into may
impose, various development, commercialization, funding, milestone, royalty, diligence, sublicensing,
insurance, patent prosecution and enforcement or other obligations on us. Our license agreements, and any
future license agreement we enter into, may also impose restrictions on our ability to license certain of
our intellectual property to third parties or to develop or commercialize certain current or future products
or technologies. In spite of our best efforts, our counterparties may conclude that we have breached our
obligations under our agreements, or that we have used the intellectual property licensed to us in an
unauthorized manner, in which case, we may be required to pay damages and the counterparty may have the
right to terminate the agreement. Any of the foregoing could result in us being unable to develop,
manufacture and sell products that are covered by the licensed intellectual property or technology, or
enable a competitor to gain access to the licensed intellectual property or technology.
We
might not have the necessary rights or the financial resources to develop, manufacture or market our current
or future products without the rights granted under our license agreements, and the loss of sales or
potential sales in current or future products covered by such license agreements could have a material
adverse effect on our business, financial condition, results of operations, cash flows and prospects.
Disputes
may arise regarding intellectual property subject to license agreements, including:
•the
scope of rights granted under the license agreement and other interpretation related issues;
•the
extent to which our technology and processes infringe on intellectual property of the licensor that is not
subject to the license agreement;
•the
sublicensing of patent and other rights under our collaborative development relationships;
•our
diligence obligations under the license agreement and what activities satisfy those diligence
obligations;
•our
financial obligations under the license agreement;
•the
inventorship and ownership of inventions and know-how resulting from the joint creation or use of
intellectual property by our licensors and us and our partners; and
•the
priority of invention of patented technology.
In
addition, the agreements under which we currently license intellectual property or technology to or from
third parties are complex, and certain provisions in such agreements may be susceptible to multiple
interpretations. The resolution of any contract interpretation disagreement that may arise could narrow what
we believe to be the scope of our rights to the relevant intellectual property or technology, or increase
what we believe to be our financial or other obligations under the relevant agreement, either of which could
have a material adverse effect on our business, financial condition, results of operations, and prospects.
Moreover, if disputes over intellectual property that we have licensed prevent or impair our ability to
maintain our current licensing arrangements on commercially acceptable terms, we may be unable to
successfully develop and commercialize the affected future products.
In
some cases, we may not have primary control over prosecution, maintenance, enforcement and defense of
patents and patent applications that we have in-licensed from third parties, and instead we rely on our
licensors for these activities. We cannot be certain that such activities have been or will be conducted in
compliance with applicable laws and regulations or in a manner consistent with the best interests of our
business. If we do undertake any enforcement of our in-licensed patents or defense of any claims asserting
the invalidity of such patents, such actions may be subject to the cooperation of our licensors or other
third parties. If our licensors or other third parties fail to prosecute, maintain, enforce and defend
intellectual property licensed to us, or lose their own rights to such intellectual property, the rights we
have licensed may be impaired or eliminated and our ability to develop and commercialize any of our products
that are subject to such rights could be adversely affected.
In-licensing
or acquisition of third-party intellectual property is a competitive area and a number of more established
companies are also pursuing strategies to in-license or acquire third-party intellectual property rights
that we may consider attractive or necessary for our business. These companies may have a competitive
advantage over us due to their size, cash resources and greater capabilities with respect to clinical
development and commercialization. Furthermore, companies that perceive us as a
competitor
may be unwilling to assign or license rights to us. If we are unable to successfully obtain rights to
required third-party intellectual property rights or maintain the existing intellectual property rights we
have on reasonable terms or at all, we may have to abandon development of the relevant program or current or
future product and our business, financial condition, results of operations, cash flows and prospects could
suffer.
Changes
to the patent law in the United States and other jurisdictions could increase the uncertainties and costs
surrounding the prosecution of our patent applications and the enforcement or defense of our issued patents,
thereby impairing our ability to protect our technologies and current or future products.
As
is the case with other life sciences companies, our success is heavily dependent on intellectual property,
particularly patents. Obtaining and enforcing patents in the life sciences industry involves both
technological and legal complexity and is therefore costly, time consuming and inherently uncertain. Changes
in either the patent laws or in interpretations of patent laws in the United States and other countries may
increase the uncertainties and costs surrounding the prosecution of patent applications and the enforcement
or defense of issued patents.
For
example, the Leahy-Smith America Invents Act (the “America Invents Act”), was signed into law on
September 16, 2011, and many of the substantive changes became effective on March 16, 2013. The America
Invents Act and its implementation could increase the uncertainties and costs surrounding the prosecution of
our patent applications and the enforcement or defense of our issued patents, all of which could have a
material adverse effect on our business, financial condition, results of operations, and prospects.
Specifically, the America Invents Act reformed United States patent law in part by changing the U.S. patent
system from a “first to invent” system to a “first inventor to file” system. Under a
“first inventor to file” system, assuming the other requirements for patentability are met, the
first inventor to file a patent application generally will be entitled to the patent on an invention
regardless of whether another inventor was the first to invent the invention. This will require us to be
cognizant going forward of the time from invention to filing of a patent application and be diligent in
filing patent applications. Circumstances may arise that could prevent us from promptly filing patent
applications on our inventions and allow third parties to file patents claiming our inventions before we are
able to do so. The America Invents Act also includes a number of significant changes that affect the way
patent applications will be prosecuted and may also affect patent litigation. These include allowing
third-party submission of prior art to the USPTO during patent prosecution and additional procedures to
attack the validity of a patent by the USPTO administered post grant proceedings, including reexamination
proceedings, inter
partes
review, post grant review and derivation proceedings. These adversarial proceedings at the USPTO review
patent claims without the presumption of validity afforded to U.S. patents in lawsuits in U.S. federal
courts, and use a lower burden of proof than used in litigation in U.S. federal courts. Therefore, it is
generally considered easier for a competitor or third party to have a U.S. patent invalidated in a USPTO
post-grant review or inter
partes
review proceeding than in a litigation in a U.S. federal court.
In
addition, the patent positions of companies in the life sciences industry are particularly uncertain. Recent
U.S. Supreme Court rulings have narrowed the scope of patent protection available in certain circumstances
and weakened the rights of patent owners in certain situations. This combination of events has created
uncertainty with respect to the validity and enforceability of patents, once obtained. Depending on future
actions by the U.S. Congress, the federal courts, and the USPTO, the laws and regulations governing patents
could change in unpredictable ways. In addition, the complexity and uncertainty of European patent laws have
also increased in recent years. Complying with these laws and regulations could have a material adverse
effect on our existing patent portfolio and our ability to protect and enforce our intellectual property in
the future.
Obtaining
and maintaining our patent protection depends on compliance with various procedural, documentary, fee
payment and other requirements imposed by governmental patent agencies, and our patent protection could be
reduced or eliminated for noncompliance with these requirements.
Periodic
maintenance fees, renewal fees, annuity fees and various other governmental fees on patents and patent
applications will be due to be paid to the USPTO and various government patent agencies outside the United
States over the lifetime of our patents and patent applications and any patent rights we may own or license
in the future. Additionally, the USPTO and various government patent agencies outside the United States
require compliance with a number of procedural, documentary, fee payment and other similar provisions during
the patent application process. In certain cases, an inadvertent lapse can be cured by payment of a late fee
or by other means in accordance with rules applicable to the particular jurisdiction. However, there are
situations in which noncompliance can result in abandonment or lapse of the patent or patent application,
resulting in partial or complete loss of patent rights in the relevant jurisdiction. If we or our licensors
fail to maintain the patents and patent applications covering or otherwise protecting our current or future
products, it could have a material adverse effect on our business. In addition, to the extent that we have
responsibility for taking any action related to the prosecution or maintenance of patents or patent
applications in-licensed from a third party, any failure on our part to maintain the in-licensed
intellectual property could jeopardize our rights under the relevant license and may have a material adverse
effect on our business, financial condition, results of operations, cash flows and prospects.
We
may be subject to claims by third parties asserting that our employees, consultants, independent contractors
or we have misappropriated their intellectual property, or claiming ownership of what we regard as our own
intellectual property and proprietary technology.
Many
of our employees were previously employed at universities or other life science, biotechnology or
pharmaceutical companies, including our competitors or potential competitors. We try to ensure that our
employees do not use the proprietary information or know-how of others in their work for us. We may,
however, be subject to claims that we or these employees have inadvertently or otherwise used or disclosed
intellectual property, trade secrets or other proprietary information of any such employee’s former
employer or that patents and applications we have filed to protect inventions of these individuals, even
those related to one or more of our current or future products, are rightfully owned by their former or
concurrent employer. Litigation may be necessary to defend against these claims. Even if we are successful
in defending ourselves, such litigation could result in substantial costs to us or be distracting to our
management. If we fail to defend any such claims, in addition to paying monetary damages, we may lose
valuable intellectual property rights or personnel or we could be required to obtain a license from such
third party to commercialize our technology or products. Such a license may not be available on an exclusive
basis or on commercially reasonable terms or at all.
In
addition, while we typically require our employees, consultants and independent contractors who may be
involved in the development of intellectual property to execute agreements assigning such intellectual
property to us, we may be unsuccessful in executing such an agreement with each party who in fact develops
intellectual property that we regard as our own, or such agreements may be breached or alleged to be
ineffective, and the assignment may not be self-executing, which may result in claims by or against us
related to the ownership of such intellectual property or may result in such intellectual property becoming
assigned to third parties. If we fail in enforcing or defending any such claims, in addition to paying
monetary damages, we may lose valuable intellectual property rights. Even if we are successful in
prosecuting or defending against such claims, litigation could result in substantial costs and be a
distraction to our senior management and scientific personnel. Any of the foregoing could have a material
adverse effect on our business, financial condition, results of operations, cash flows and prospects.
We
may not be able to protect our intellectual property and proprietary rights throughout the world.
Filing,
prosecuting, and defending patents on current or future products in all countries throughout the world would
be prohibitively expensive, and the laws of foreign countries may not protect our rights to the same extent
as the laws of the United States. For example, patent scope or coverage varies between countries based on
the differences between the respective patent laws in each country or jurisdiction. Consequently, we may not
be able to prevent third parties from practicing our inventions in all countries outside the United States,
or from selling or importing products made using our inventions in and into the United States or other
jurisdictions. Third parties may use our technologies in jurisdictions where we have not obtained or are
unable to adequately enforce patent protection to develop their own products and, further, may export
otherwise infringing products to territories where we have patent protection but enforcement is not as
strong as that in the United States. These products may compete with our products, and our patents or other
intellectual property rights may not be effective or sufficient to prevent them from competing.
Many
companies have encountered significant problems in protecting and defending intellectual property rights in
foreign jurisdictions. The legal systems of certain countries, particularly certain developing countries, do
not favor the enforcement of patents, trade secrets, and other intellectual property protection,
particularly those relating to biotechnology products, which could make it difficult for us to stop the
infringement of our patents or marketing of competing products in violation of our intellectual property and
proprietary rights generally. Proceedings to enforce our intellectual property and proprietary rights in
foreign jurisdictions could result in substantial costs and divert our efforts and attention from other
aspects of our business, could put our patents at risk of being invalidated or interpreted narrowly, could
put our patent applications at risk of not issuing, and could provoke third parties to assert claims against
us. We may not prevail in any lawsuits that we initiate, and the damages or other remedies awarded, if any,
may not be commercially meaningful. Accordingly, our efforts to enforce our intellectual property and
proprietary rights around the world may be inadequate to obtain a significant commercial advantage from the
intellectual property that we develop or license.
Many
countries have compulsory licensing laws under which a patent owner may be compelled to grant licenses to
third parties. In addition, many countries limit the enforceability of patents against government agencies
or government contractors. In these countries, the patent owner may have limited remedies, which could
materially diminish the value of such patent. If we or any of our licensors is forced to grant a license to
third parties with respect to any patents relevant to our business, our competitive position may be
impaired, and our business, financial condition, results of operations, cash flows and prospects may be
adversely affected.
We
rely on confidentiality agreements that, if breached, may be difficult to enforce and could have a material
adverse effect on our business and competitive position.
Our
policy is to enter agreements relating to the non-disclosure and non-use of confidential information with
third parties, including our contractors, consultants, advisors and research collaborators, as well as
agreements that purport to require the disclosure and assignment to us of the rights to the ideas,
developments, discoveries and inventions of our employees and consultants while we employ them. However,
these agreements can be difficult and costly to enforce. Moreover, to the extent that our contractors,
consultants, advisors and research collaborators apply or independently develop intellectual property in
connection with any of our projects, disputes may arise as to the proprietary rights to the intellectual
property. If a dispute arises, a court may determine that the right belongs to a third party, and
enforcement of our rights can be costly and unpredictable. In addition, we rely on trade secrets and
proprietary know-how that we seek to protect in part by confidentiality agreements with our employees,
contractors, consultants, advisors or others. Despite the protective measures we employ, we still face the
risk that:
•these
agreements may be breached;
•these
agreements may not provide adequate remedies for the applicable type of breach; or
•our
trade secrets or proprietary know-how will otherwise become known.
Any
breach of our confidentiality agreements or our failure to effectively enforce such agreements would have a
material adverse effect on our business and competitive position.
If
our trademarks, trade dress, and trade names are not adequately protected, we may not be able to build name
recognition in our markets of interest and our business, financial condition, results of operations, cash
flows and prospects may be adversely affected.
Our
trademarks, trade dress, or trade names may be challenged, infringed, circumvented or declared generic or
determined to be infringing on other marks. We may not be able to protect our rights to these trademarks and
trade names or may be forced to stop using these names or marks which we need for name recognition by
potential partners or customers in our markets of interest. During trademark registration proceedings, we
may receive rejections. Although we would be given an opportunity to respond to those rejections, we may be
unable to overcome such rejections. In addition, in the USPTO and in comparable agencies in many foreign
jurisdictions, third parties are given an opportunity to oppose pending trademark applications and to seek
to cancel registered trademarks. Opposition or cancellation proceedings may be filed against our trademarks,
and our trademarks may not survive such proceedings. If we are unable to establish name recognition based on
our trademarks and trade names, we may not be able to compete effectively and our business, financial
condition, results of operations, cash flows and prospects may be adversely affected.
Intellectual
property rights do not necessarily address all potential threats.
The
degree of future protection afforded by our proprietary and intellectual property rights is uncertain
because such rights offer only limited protection and may not adequately protect our rights or permit us to
gain or keep our competitive advantage. For example:
•others
may be able to develop products that are similar to, or better than, our current or future products in a way
that is not covered by the claims of the patents we license or may own currently or in the future;
•we,
or our licensing partners or current or future collaborators, might not have been the first to make the
inventions covered by issued patents or pending patent applications that we license or may own currently or
in the future;
•we,
or our licensing partners or current or future collaborators, might not have been the first to file patent
applications for certain of our or their inventions;
•our
pending owned or in-licensed patent applications may not lead to issued patents;
•we
may choose not to file a patent for certain trade secrets or know-how, and a third party may subsequently
file a patent covering such intellectual property;
•our
competitors or other third parties might conduct research and development activities in countries where we
do not have patent rights and then use the information learned from such activities to develop competitive
products for sale in our major commercial markets;
•it
is possible that there are prior public disclosures that could invalidate our or our licensors’
patents;
•the
patents of third parties or pending or future applications of third parties, if issued, may have an adverse
effect on our business;
•any
patents that we obtain may not provide us with any competitive advantages or may ultimately be found not to
be owned by us, invalid or unenforceable; or
•we
may not develop additional proprietary technologies that are patentable.
Should
any of these events occur, they could significantly harm our business, financial conditions, results of
operations, cash flows and prospects.
Risks
Related to Our Indebtedness
Our
existing level of indebtedness may increase and adversely affect our business and growth prospects, growth
prospects, and financial condition, as well as our ability to raise additional capital on favorable terms,
which could, in turn, limit our ability to develop or acquire new products, services, technologies and
methodologies.
As
of December 31, 2024, we had total current and long-term indebtedness outstanding of approximately
$295.9 million, including term loans of $299.7 million less unamortized debt issuance costs of $3.8 million.
We may incur significant additional indebtedness in the future. If we increase our current indebtedness
levels, the risks related to our indebtedness as set forth herein could intensify.
Our
indebtedness, or any additional indebtedness we may incur, could require us to divert funds identified for
other purposes for debt service and impair our liquidity position. If we cannot generate sufficient cash
flow from operations to service our debt, we may need to refinance our debt, dispose of assets or issue
equity to obtain necessary funds. We do not know whether we will be able to take any of these actions on a
timely basis, on terms satisfactory to us or at all.
Our
indebtedness, the cash flow needed to satisfy our debt and the covenants contained in our credit agreement
have important consequences, including:
•limiting
funds otherwise available for financing our capital expenditures by requiring us to dedicate a portion of
our cash flows from operations to the repayment of debt and the interest on this debt;
•limiting
our ability to incur or prepay existing indebtedness, pay dividends or distributions, dispose of assets,
engage in mergers and consolidations, make acquisitions or other investments and make changes in the nature
of the business, among other things;
•making
us more vulnerable to rising interest rates, as certain of our borrowings, including borrowings under our
credit agreement, bear variable rates of interest; and
•making
us more vulnerable in the event of a downturn in our business.
Our
level of indebtedness may place us at a competitive disadvantage to our competitors that are not as highly
leveraged. Fluctuations in interest rates can increase borrowing costs. Increases in interest rates may
directly impact the amount of interest we are required to pay and reduce earnings accordingly. In addition,
tax laws, including the disallowance or deferral of tax deductions for interest paid on outstanding
indebtedness, could have an adverse effect on our liquidity and our business, financial condition, results
of operations, cash flows and prospects. Further, our credit agreement contains customary affirmative and
negative covenants and certain restrictions on operations that could impose operating and financial
limitations and restrictions on us, including restrictions on our ability to enter into particular
transactions and to engage in other actions that we may believe are advisable or necessary for our
business.
Variable
rate indebtedness that we have incurred or may in the future incur will subject us to interest rate risk,
which could cause our debt service obligations to increase significantly.
Certain
borrowings under our credit agreement bear variable rates of interest. An increase in interest rates
directly increases the amount of interest we are required to pay on our variable rate borrowings, and
negatively impacts our net income and cash flows, including cash available for servicing our indebtedness
more generally.
We
may not be able to generate sufficient cash flow to service all of our indebtedness and may be forced to
take other actions to satisfy our debt service obligations, which actions may not be adequate or may impose
additional restrictions on us.
Our
ability to make scheduled debt service payments or to refinance outstanding debt obligations depends on our
financial and operating performance, which is subject to prevailing economic, industry and competitive
conditions and certain financial, business, economic and other factors beyond our control, including those
discussed under “Risks
Related to Our Business and Strategy”
above. We may not be able to maintain a sufficient level of cash flow from operating activities to permit us
to pay the principal, premium, if any, and interest on our indebtedness. If we cannot meet our debt service
obligations, the holders of our indebtedness would have the right to accelerate such indebtedness and, to
the extent such indebtedness is secured, foreclose on our assets. This could have serious consequences to
our business, financial condition and results of operations and could cause us to become bankrupt or
insolvent.
Even
if this does not occur, any failure to make payments of interest and principal on our outstanding
indebtedness on a timely basis would likely result in a reduction of our creditworthiness, which would also
harm our ability to incur additional indebtedness.
If
our cash flows and other capital resources are insufficient to fund our debt service obligations, we may be
forced to reduce or delay capital expenditures and acquisitions, sell assets, raise additional capital or
seek to restructure or refinance our indebtedness. If we issue additional equity to repay all or a portion
of our indebtedness, our shareholders may experience significant dilution of their equity interests. Any
refinancing of our indebtedness could be at higher interest rates and may require us to comply with more
onerous covenants, including the requirement to maintain specified liquidity or other ratios or restrictions
on our ability to pay dividends or make acquisitions. If these alternative measures are not successful, we
may be required to sell material assets or operations to attempt to meet our debt service obligations.
Further, we may not be able to consummate these asset sales (including as a result of restrictions imposed
on us under our credit agreement) or sell assets at prices and on terms that we believe are fair, and any
proceeds that we do receive may not be adequate to meet any debt service obligations then due.
The
terms of the financing documents governing our Credit Agreement restrict our current and future operations,
particularly our ability to respond to changes or to take certain actions.
The
financing documents governing our credit agreement contain a number of restrictive covenants that impose
significant operating and financial restrictions on us and may limit our ability to engage in acts that may
be in our long-term best interests, including restrictions on our ability to:
•incur
additional indebtedness;
•incur
liens;
•merge,
dissolve, liquidate, amalgamate, consolidate or sell all or substantially all of our assets;
•declare
or pay certain dividends, payments or distribution or repurchase or redeem certain capital stock;
•permit
our subsidiaries to enter into agreements restricting their ability to pay dividends, make loans, incur
liens and sell assets; and
•make
certain investments.
These
restrictions could limit, potentially significantly, our operational flexibility and affect our ability to
finance our future operations or capital needs or to execute our business strategy.
Risks
Related to Our Organizational Structure
Our
principal asset is our interest in Maravai Topco Holdings LLC (“Topco LLC”), and, accordingly,
we depend on distributions from Topco LLC to pay our taxes and expenses, including payments under the Tax
Receivable Agreement. Topco LLC’s ability to make such distributions may be subject to various
limitations and restrictions.
We
are a holding company and have no material assets other than our ownership of equity interests in Topco LLC.
As such, we have no independent means of generating revenue or cash flow, and our ability to pay our taxes,
satisfy our obligations under the Tax Receivable Agreement and pay operating expenses or declare and pay
dividends, if any, in the future depends on the financial results and cash flows of Topco LLC and its
subsidiaries and distributions we receive from Topco LLC. There can be no assurance that Topco LLC and its
subsidiaries will generate sufficient cash flow to distribute funds to us or that applicable state law and
contractual restrictions, including negative covenants in debt instruments of Topco LLC and its
subsidiaries, will permit such distributions.
Topco
LLC is treated as a partnership for U.S. federal income tax purposes and, as such, is not subject to any
entity-level U.S. federal income tax. For U.S. federal income tax purposes, taxable income of Topco LLC is
allocated to the LLC Unitholders of Topco LLC, including us. Accordingly, we incur income taxes on our
distributive share of any net taxable income of Topco LLC. Under the terms of the Topco LLC operating
agreement (the “LLC Operating Agreement”), Topco LLC is obligated to make tax distributions to
LLC Unitholders, including us. In addition to tax and dividend payments, we also incur expenses related to
our operations, including obligations to make payments under the Tax Receivable Agreement. Due to the
uncertainty of various factors, we cannot estimate the likely tax benefits we may realize as a result of our
purchase of LLC Units in Topco LLC (the “LLC Units”) and LLC Unit exchanges, and the resulting
amounts we are likely to pay out to LLC Unitholders pursuant to the Tax Receivable Agreement; however, such
payments may be substantial. Under the LLC Operating Agreement, tax distributions shall be made on a pro
rata basis among the LLC Unitholders, and will be calculated without regard to any applicable basis
adjustment under Section 743(b) of The Internal Revenue Code (“the Code”).
We
expect Topco LLC will continue to make cash distributions to the owners of LLC Units in amounts sufficient
to (1) fund all or part of their tax obligations in respect of taxable income allocated to them and (2)
cover our operating expenses, including payments under the Tax Receivable Agreement.
However,
Topco LLC’s ability to make such distributions may be subject to various limitations and restrictions,
such as restrictions on distributions that would violate either any contract or agreement to which Topco LLC
or its subsidiaries is then a party, including debt agreements, or any applicable law, or that would have
the effect of rendering Topco LLC or its subsidiaries insolvent. In addition, effective for taxable years
beginning after December 31, 2017, liability for adjustments to a partnership’s tax return may be
imputed on the partnership itself in certain circumstances, absent an election to the contrary. Topco LLC
may be subject to material liabilities pursuant to this legislation and related guidance if, for example,
its calculations of taxable income are incorrect. If we do not have sufficient funds to pay tax or other
liabilities or to fund our operations, we may have to borrow funds, which could materially adversely affect
our liquidity and financial condition and subject us to various restrictions imposed by any such lenders. To
the extent that we are unable to make payments under the Tax Receivable Agreement, such payments generally
will be deferred and will accrue interest until paid. Nonpayment for a specified period, however, may
constitute a breach of a material obligation under the Tax Receivable Agreement and therefore accelerate
payments due under the Tax Receivable Agreement, unless, generally, such nonpayment is due to a lack of
sufficient funds.
Payments
under the Tax Receivable Agreement will be based on the tax reporting positions we determine. Although we
are not aware of any issue that would cause the IRS to challenge existing tax basis, a tax basis increase or
other tax attributes subject to the Tax Receivable Agreement, if any subsequent disallowance of tax basis or
other benefits were so determined by the IRS, we would not be reimbursed for any payments previously made
under the applicable Tax Receivable Agreement (although we would reduce future amounts otherwise payable
under such Tax Receivable Agreement). In addition, the actual state or local tax savings we realize may be
different than the amount of such tax savings we are deemed to realize under the Tax Receivable Agreement,
which will be based on an assumed combined state and local tax rate applied to our reduction in taxable
income as determined for U.S. federal income tax purposes as a result of the tax attributes subject to the
Tax Receivable Agreement. As a result, payments could be made under the Tax Receivable Agreement in excess
of the tax savings we realize in respect of the attributes to which the Tax Receivable Agreement
relate.
Conflicts
of interest could arise between our shareholders and Maravai Life Sciences Holdings, LLC (“MLSH
1”), which may impede business decisions that could benefit our shareholders.
MLSH
1, which is controlled by GTCR, LLC (“GTCR”) and is the only holder of LLC Units other than us,
has the right to consent to certain amendments to the LLC Operating Agreement, as well as to certain other
matters. MLSH 1 may exercise these voting rights in a manner that conflicts with the interests of our
shareholders. Circumstances may arise in the future when the interests of MLSH 1 conflict with the interests
of our shareholders. As we control Topco LLC, we have certain obligations to MLSH 1 as an LLC Unitholder in
Topco LLC that may conflict with fiduciary duties our officers and directors owe to our shareholders. These
conflicts may result in decisions that are not in the best interests of shareholders.
The
Tax Receivable Agreement requires us to make cash payments to MLSH 1 and MLSH 2 in respect of certain tax
benefits to which we may become entitled, and we expect that the payments we may be required to make could
be substantial.
Pursuant
to the Tax Receivable Agreement we are required to make cash payments to MLSH 1 and MLSH 2, collectively,
equal to 85% of the tax benefits, if any, that we actually realize, or, in some circumstances, are deemed to
realize, as a result of (i) certain increases in the tax basis of assets of Topco LLC and its subsidiaries
resulting from purchases or exchanges of LLC Units, (ii) certain tax attributes related to the LLC Units
held by the corporations that merged into our corporate structure as part of the Organizational Transactions
(as discussed in Note 11 to our consolidated financial statements), Topco LLC and subsidiaries of Topco LLC
that existed prior to our initial public offering and (iii) certain other tax benefits related to our
entering into the Tax Receivable Agreement, including tax benefits attributable to payments that we make
under the Tax
Receivable
Agreement. Any payments made by us to MLSH 1 and MLSH 2 under the Tax Receivable Agreement will generally
reduce the amount of overall cash flow that might have otherwise been available to us. To the extent that we
are unable to make payments under the Tax Receivable Agreement, such payments generally will be deferred and
will accrue interest until paid. Nonpayment for a specified period, however, may constitute a breach of a
material obligation under the Tax Receivable Agreement and therefore accelerate payments due under the Tax
Receivable Agreement, unless, generally, such nonpayment is due to a lack of sufficient funds. Furthermore,
our future obligation to make payments under the Tax Receivable Agreement could make us a less attractive
target for an acquisition, particularly in the case of an acquirer that cannot use some or all of the tax
benefits that may be deemed realized under the Tax Receivable Agreement. The payments under the Tax
Receivable Agreement are also not conditioned upon MLSH 1 maintaining a continued ownership interest in
Topco LLC.
Estimating
the amount and timing of our realization of tax benefits subject to the Tax Receivable Agreement is by its
nature imprecise. The actual amount and timing of any payments under the Tax Receivable Agreement will vary
depending upon a number of factors, including the timing of exchanges by MLSH 1, the amount of gain
recognized by MLSH 1, the amount and timing of the taxable income we generate in the future and the federal
tax rates then applicable. Accordingly, estimating the amount and timing of payments that may become due
under the Tax Receivable Agreement is also by its nature imprecise.
We
expect that the aggregate payments that we may be required to make under the Tax Receivable Agreement may be
substantial. Assuming no material changes in the relevant tax law, we expect that no future payments under
the Tax Receivable Agreement relating to the purchase by Maravai LifeSciences Holdings, Inc. of LLC Units
from MLSH 1 and the corresponding tax attributes are probable. This determination is based on our estimate
of taxable income for the year ended December 31, 2024. Future payments in respect of subsequent
exchanges or financings and tax attributes relating to the purchase by the Company of LLC Units from MLSH 1
would be in addition to this amount and may be substantial. The foregoing numbers are merely
estimates—the actual payments could differ materially. It is possible that future transactions or
events could increase or decrease the actual tax benefits realized and the corresponding Tax Receivable
Agreement payments. There may be a material negative effect on our liquidity if, as a result of timing
discrepancies or otherwise, the payments under the Tax Receivable Agreement exceed the actual benefits we
realize in respect of the tax attributes subject to the Tax Receivable Agreement and/or distributions to
Maravai LifeSciences Holdings, Inc. by Topco LLC are not sufficient to permit Maravai LifeSciences Holdings,
Inc. to make payments under the Tax Receivable Agreement after it has paid taxes.
Payments
under the Tax Receivable Agreement will be based on the tax reporting positions that we determine. Although
we are not aware of any issue that would cause the Internal Revenue Service (“IRS”) to challenge
a tax basis increase or the availability of tax attributes of the corporations merged into our corporate
structure as part of the Organizational Transactions, if any, we will not be reimbursed for any cash
payments previously made to MLSH 1 and MLSH 2 pursuant to the Tax Receivable Agreement if any tax benefits
initially claimed by us are subsequently disallowed, in whole or in part, by the IRS or other applicable
taxing authority. For example, if the IRS later asserts that we did not obtain a tax basis increase or
disallows (in whole or in part) the availability of Net Operating Losses (“NOLs”) due to a
potential ownership change under Section 382 of the Internal Revenue Code (“IRC” or “the
Code”), among other potential challenges, then we would not be reimbursed for any cash payments
previously made to MLSH 1 and MLSH 2 pursuant to the Tax Receivable Agreement with respect to such tax
benefits that we had initially claimed. Instead, any excess cash payments made by us pursuant to the Tax
Receivable Agreement will be netted against any future cash payments that we might otherwise be required to
make under the terms of the Tax Receivable Agreement. Nevertheless, any tax benefits initially claimed by us
may not be disallowed for a number of years following the initial time of such payment or, even if
challenged early, such excess cash payment may be greater than the amount of future cash payments that we
might otherwise be required to make under the terms of the Tax Receivable Agreement. Accordingly, there may
not be sufficient future cash payments against which to net. The applicable U.S. federal income tax rules
are complex, and there can be no assurance that the IRS or a court will not disagree with our tax reporting
positions. As a result, it is possible that we could make cash payments under the Tax Receivable Agreement
that are substantially greater than our actual cash tax savings.
The
Tax Receivable Agreement liability is recorded on the consolidated balance sheets as a contingent liability
under ASC 450, “Liabilities,” and reflects management’s assessment that positive future
taxable income and realization of cash tax savings are probable. Management’s assessment of whether
payment of the Tax Receivable Agreement liability is probable is generally based on the determination as to
whether it is more likely than not that the deferred tax assets will be realized. We evaluate the
realizability of our deferred tax assets on a quarterly basis and establish valuation allowances when it is
more likely than not that all or a portion of a deferred tax asset may not be realized. As of December 31,
2023, we established a full valuation allowance against our deferred tax assets and derecognized the
remaining non-current liability under the Tax Receivable Agreement after concluding it was not probable that
we would generate sufficient future taxable income to utilize deferred tax assets that would result in
payments due under the Tax Receivable Agreement. There have been no changes to our position as of
December 31, 2024. If revised forecasts of our future taxable income or other relevant factors result
in us releasing all or a portion of the valuation allowance recorded against the deferred tax assets
applicable to the aforementioned tax attributes in a future period, the remaining Tax Receivable Agreement
liability may be considered probable at that time and recorded on the
consolidated
balance sheet and within earnings. It is impossible to predict when and to what extent, if at all, such
valuation allowance will be released, and therefore whether we would again be required to recognize all or a
portion of the Tax Receivable Agreement liability, which would adversely impact our future results of
operations, possibly in a material manner.
Under
the Tax Receivable Agreement, we are required to provide MLSH 1 and MLSH 2 with a schedule setting forth the
calculation of payments that are due under the TRA with respect to each taxable year in which a payment
obligation arises within ninety (90) days after the extended due date of our U.S. federal income tax return
for such taxable year. This calculation will be based upon the advice of our tax advisors. The calculation
will become final thirty (30) days after it is provided assuming that no objections are made. Payments under
the Tax Receivable Agreement will generally be made within five (5) business days after this schedule
becomes final pursuant to the procedures set forth in the Tax Receivable Agreement. Interest on such
payments will begin to accrue at a rate of Intercontinental Exchange London Interbank Offer Rate
(“LIBOR”) for a period of one month (or, if LIBOR ceases to be published, at a rate selected by
us in good faith, with characteristics similar to LIBOR or consistent with market practices generally, any
such rate, a “Replacement Rate”) plus 100 basis points from the due date (without extensions) of
such tax return. Generally, any late payments that may be made under the Tax Receivable Agreement will
continue to accrue interest at LIBOR (or a Replacement Rate, as applicable) plus 500 basis points until such
payments are made, including any late payments that we may subsequently make because we did not have enough
available cash to satisfy our payment obligations at the time at which they originally arose. Given the
cessation of LIBOR, we have transitioned to the Secured Overnight Financing Rate (“SOFR”) as the
applicable Replacement Rate as allowable under the Tax Receivable Agreement.
The
amounts that we may be required to pay to MLSH 1 and MLSH 2 under the Tax Receivable Agreement may be
accelerated in certain circumstances and may also significantly exceed the actual tax benefits that we
ultimately realize.
The
Tax Receivable Agreement provides that if (1) certain mergers, asset sales, other forms of business
combination or other changes of control were to occur, (2) we breach any of our material obligations under
the Tax Receivable Agreement or (3) at any time, we elect an early termination of the Tax Receivable
Agreement, then the Tax Receivable Agreement will terminate and our obligations, or our successor’s
obligations, to make payments under the Tax Receivable Agreement would accelerate and become immediately due
and payable. The amount due and payable in that circumstance is based on certain assumptions, including an
assumption that we would have sufficient taxable income to fully utilize all potential future tax benefits
that are subject to the Tax Receivable Agreement. We may need to incur debt to finance payments under the
Tax Receivable Agreement to the extent our cash resources are insufficient to meet our obligations under the
Tax Receivable Agreement as a result of timing discrepancies or otherwise.
As
a result of a change in control, material breach or our election to terminate the Tax Receivable Agreement
early, (1) we could be required to make cash payments to MLSH 1 and MLSH 2 that are greater than the
specified percentage of the actual benefits we ultimately realize in respect of the tax benefits that are
subject to the Tax Receivable Agreement and (2) we would be required to make an immediate cash payment equal
to the anticipated future tax benefits that are the subject of the Tax Receivable Agreement discounted in
accordance with the Tax Receivable Agreement, which payment may be made significantly in advance of the
actual realization, if any, of such future tax benefits. In these situations, our obligations under the Tax
Receivable Agreement could have a substantial negative impact on our liquidity and could have the effect of
delaying, deferring or preventing certain mergers, asset sales, other forms of business combination, or
other changes of control. There can be no assurance that we will be able to finance our obligations under
the Tax Receivable Agreement.
Our
organizational structure, including the Tax Receivable Agreement, confers certain benefits upon MLSH 1 and
MLSH 2 that will not benefit the other common shareholders to the same extent as they will benefit MLSH 1
and MLSH 2.
Our
organizational structure, including the Tax Receivable Agreement, confers certain benefits upon MLSH 1, as
the only other LLC Unitholder in Topco LLC, and MLSH 2 that will not benefit the other holders of our Class
A common stock to the same extent. We have entered into a Tax Receivable Agreement with MLSH 1 and MLSH 2,
which will provide for the payment by us to MLSH 1 and MLSH 2, collectively, of 85% of the amount of tax
benefits, if any, that we actually realize, or in some circumstances are deemed to realize, as a result of
(i) certain increases in the tax basis of assets of Topco LLC and its subsidiaries resulting from purchases
or exchanges of LLC Units, (ii) certain tax attributes of certain of the entities through which GTCR and
other existing members of MLSH 1 and MLSH 2 held their ownership interests in MLSH 1, Topco LLC and
subsidiaries of Topco LLC that existed prior to our initial public offering and (iii) certain other tax
benefits related to our entering into the Tax Receivable Agreement, including tax benefits attributable to
payments that we make under the Tax Receivable Agreement. Due to the uncertainty of various factors, we
cannot estimate the likely tax benefits we will realize as a result of purchases of LLC Units and LLC Unit
exchanges, and the resulting amounts we are likely to pay out to MLSH 1 and MLSH 2 pursuant to the Tax
Receivable Agreement; however, we estimate that such payments may be substantial. Although we will retain
15% of the amount of such tax benefits, this and other aspects of our organizational structure may adversely
impact the future trading market for the Class A common stock.
We
may not be able to realize all or a portion of the tax benefits that are currently expected to result from
the tax attributes covered by the Tax Receivable Agreement and from payments made under the Tax Receivable
Agreement.
Our
ability to realize the tax benefits that we currently expect to be available as a result of the attributes
covered by the Tax Receivable Agreement, the payments made pursuant to the Tax Receivable Agreement, and the
interest deductions imputed under the Tax Receivable Agreement all depend on a number of assumptions,
including that we earn sufficient taxable income each year during the period over which such deductions are
available and that there are no adverse changes in applicable law or regulations. Additionally, if our
actual taxable income were insufficient or there were additional adverse changes in applicable law or
regulations, we may be unable to realize all or a portion of the expected tax benefits and our cash flows
and shareholders’ equity could be negatively affected.
In
certain circumstances, Topco LLC will be required to make distributions to us and MLSH 1 and the
distributions may be substantial.
Topco
LLC is treated as a partnership for U.S. federal income tax purposes and, as such, is not subject to U.S.
federal income tax. Instead, taxable income is allocated to its members, including us. We expect Topco LLC
will continue to make tax distributions quarterly to the LLC Unitholders in Topco LLC (including us), in
each case on a pro rata basis based on Topco LLC’s net taxable income and without regard to any
applicable basis adjustment under Section 743(b) of the Code. Funds used by Topco LLC to satisfy its tax
distribution obligations will not be available for reinvestment in our business. Moreover, these tax
distributions may be substantial, and will likely exceed (as a percentage of Topco LLC’s income) the
overall effective tax rate applicable to a similarly situated corporate taxpayer. As a result, it is
possible that we will receive distributions significantly in excess of our tax liabilities and obligations
to make payments under the Tax Receivable Agreement. While our Board may choose to distribute such cash
balances as dividends on our Class A common stock, they will not be required to do so, and may in their sole
discretion choose to use such excess cash for any purpose (including an investment of such cash into Topco
LLC) depending upon the facts and circumstances at the time of determination. See “Dividend
Policy.”
Unanticipated
changes in our effective tax rates or adverse outcomes resulting from examination of our income or other tax
returns could adversely affect our operating results and financial condition.
We
are subject to income taxes in the U.S. and certain foreign jurisdictions. Our tax liabilities will be
subject to the allocation of expenses in differing jurisdictions. Our future effective tax rates could be
subject to volatility or adversely affected by a number of factors, including:
•changes
in the amount and realizability of our deferred tax assets and liabilities;
•changes
in any tax valuation allowances;
•expiration
of, or detrimental changes in, research and development tax credit laws; or
•changes
in tax laws, regulations or interpretations thereof.
In
addition, we may be subject to audits of our income, sales and other transaction taxes by U.S. federal,
state and foreign authorities. Outcomes from these audits could have an adverse effect on our operating
results and financial condition.
If
we were deemed to be an investment company under the 1940 Act, applicable restrictions could make it
impractical for us to continue our business as contemplated and could have a material adverse effect on our
business, financial condition, results of operations, cash flows and prospects.
Under
Sections 3(a)(1)(A) and (C) of the 1940 Act, a company generally will be deemed to be an “investment
company” for purposes of the 1940 Act if it (1) is, or holds itself out as being, engaged primarily,
or proposes to engage primarily, in the business of investing, reinvesting or trading in securities or (2)
is engaged, or proposes to engage, in the business of investing, reinvesting, owning, holding or trading in
securities and it owns or proposes to acquire investment securities having a value exceeding 40% of the
value of its total assets (exclusive of U.S. government securities and cash items) on an unconsolidated
basis. We do not believe that we are an “investment company,” as such term is defined in either
of those sections of the 1940 Act.
As
the sole managing member of Topco LLC, we will control and manage Topco LLC. On that basis, we believe that
our interest in Topco LLC is not an “investment security” under the 1940 Act. Therefore, we have
less than 40% of the value of our total assets (exclusive of U.S. government securities and cash items) in
“investment securities.” However, if we were to lose the right to manage and control Topco LLC,
interests in Topco LLC could be deemed to be “investment securities” under the 1940 Act.
We
intend to conduct our operations so that we will not be deemed to be an investment company. However, if we
were deemed to be an investment company, restrictions imposed by the 1940 Act, including limitations on our
capital structure and our ability to transact with affiliates, could make it impractical for us to continue
our business as contemplated and could have a material adverse effect on our business, financial condition,
results of operations, cash flows and prospects.
Risks
Related to Being a Public Company
The
restatement of our previously issued quarterly financial statements has subjected us to additional costs,
risks and uncertainty and may also affect investor confidence and harm our reputation.
As
discussed in Note 18 to our consolidated financial statements included elsewhere in this Annual Report on
Form 10-K, we determined that our unaudited condensed consolidated financial statements as of and for the
three and six months ended June 30, 2024 and the three and nine months ended September 30, 2024 required
restatement primarily to correct an error we identified relating to the timing of revenue recognition for a
product sale with non-standard contractual terms. Assessment of the error and the effectiveness of the
Company’s disclosure controls and procedures and its internal control over financial reporting, the
resulting restatement of our unaudited condensed consolidated financial statements for the impacted periods,
and the ongoing process of remediating the material weaknesses in our internal control over financial
reporting have diverted management’s attention and caused us to incur unanticipated expenses for
legal, audit and other professional services fees. The restatement and the associated non-reliance on our
previously issued quarterly financial statements and other related financial information could also cause
investors to lose confidence in our financial reporting and harm our reputation, which in turn, could have a
material adverse effect on our business, financial condition, results of operations, cash flows and
prospects. We are currently subject to a putative securities class action lawsuit, and face the potential
for additional, litigation or regulatory inquiries in connection with or related to the restatement and
associated material weaknesses, including claims involving the U.S. federal securities laws. Litigation and
any regulatory inquiries are likely to divert management’s time and attention and, regardless of the
outcome of such litigation, we will incur legal and other costs of defense, which could be significant.
Further, if we do not prevail in the litigation, we could be required to pay substantial damages or
settlement costs, which could have a material adverse effect on our financial condition, results of
operations and cash flows.
We
have identified material weaknesses in our internal control over financial reporting and, if we fail to
remediate these material weaknesses in a timely manner or at all, we may not be able to comply with our
financial reporting obligations, which could expose us to additional legal and business risks and
uncertainties.
As
disclosed in Part II, Item 9A, “Controls and Procedures” in this Annual Report on Form 10-K, we
identified the following material weaknesses as of December 31, 2024:
•we
did not design and operate effective controls over the Company’s revenue process; and
•we
did not operate effective controls over the Company’s quantitative goodwill impairment
assessment.
The
material weaknesses related to our revenue process resulted in the restatement of our unaudited condensed
consolidated financial statements as of and for the three and six months ended June 30, 2024, and as of and
for the three and nine months ended September 30, 2024. As a result of the material weaknesses, management
concluded that our internal control over financial reporting was not effective as of December 31, 2024.
While we are actively engaged in the process of designing and implementing a plan, including appropriate
controls, to remediate the identified material weaknesses, there can be no assurance that our actions will
fully remediate the material weaknesses in a timely manner, if at all. The implementation of remediation
measures will require validation and testing of the design and operating effectiveness of the respective
controls over several financial reporting cycles. If the actions we take do not sufficiently remediate the
material weaknesses in a timely manner, our ability to record, process and report financial information
accurately could be adversely affected, and there may continue to be a reasonable possibility that these
control deficiencies, or others, could result in an additional material misstatement of our financial
statements that would not be prevented or detected on a timely basis. If this occurs, it could jeopardize
our ability to comply with our financial reporting obligations, including under SEC rules and regulations,
NASDAQ listing standards and the financial covenants under our credit agreement, and expose us to additional
risks as further discussed below.
If
we are unable to design and maintain proper and effective internal control over financial reporting in the
future, or our internal control over financial reporting is determined by us or our auditors to not be
operating effectively, we may be exposed to additional risks and investor confidence in us and the value of
our Class A common stock could be adversely affected.
Our
management is responsible for establishing and maintaining adequate internal control over financial
reporting. Internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial
reporting
and the preparation of financial statements in accordance with GAAP. We are required, pursuant to Section
404 of the Sarbanes-Oxley Act, to furnish a report by management on, among other things, the effectiveness
of our internal control over financial reporting. This assessment must be made yearly and must include
disclosure of any material weaknesses identified by our management in our internal control over financial
reporting. We also must disclose changes made in our internal control and procedures on a quarterly basis.
Further, our independent registered public accounting firm must report on the effectiveness of our internal
control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act.
As
noted above and further disclosed in Part II, Item 9A, “Controls and Procedures” of this Annual
Report, we identified material weaknesses in our internal control over financial reporting as of December
31, 2024,and as a result, our management concluded that our disclosure controls and procedures and internal
control over financial reporting were not effective as of December 31, 2024. While we are actively engaged
in the process of designing appropriate controls to address these material weaknesses, there can be no
assurance that the actions will fully remediate the material weaknesses in a timely manner or that there
will not be additional material weaknesses in our internal control over financial reporting in the future.
If we are unable to remediate the identified material weaknesses in a timely manner, or at all, or are
otherwise unable to maintain effective internal control over financial reporting in the future, our ability
to record, process and report financial information accurately, and to comply with our financial reporting
obligations, could be adversely impacted.
If
this occurs, it could jeopardize our ability to comply with our financial reporting obligations, including
under SEC rules and regulations, NASDAQ listing standards and the financial covenants under our credit
agreement, which, in turn, could subject us to regulatory enforcement actions or stockholder litigation,
cause us to breach the covenants under our credit agreement, limit our ability to access the credit and
capital markets, adversely affect investor confidence in us and the value of our Class A common stock, and
harm our reputation, which may make it more difficult for us to market and sell products and services to new
and existing customers.
The
pending putative securities class action as well as future potential litigation or regulatory enforcement
actions will require management attention and resources and cause us to incur unanticipated costs, which
could be significant, and raise other risks to our business operations.
Risks
Related to Our Class A Common Stock
GTCR
controls us, and its interests may conflict with ours or yours in the future.
As
of December 31, 2024, investment entities affiliated with GTCR collectively controlled approximately
52% of the voting power of our outstanding common stock and therefore GTCR controls the outcome of all
matters submitted to a vote of our shareholders. This control enables GTCR to control the election of the
members of the Board and all other corporate decisions. Even when GTCR ceases to control a majority of the
total voting power, for so long as GTCR continues to own a significant percentage of our Class A common
stock, GTCR will still be able to significantly influence the composition of our Board and the approval of
actions requiring shareholder approval. Accordingly, for such period of time, GTCR will have significant
influence with respect to our management, business plans and policies, including the appointment and removal
of our officers, decisions on whether to raise future capital and amending our charter and bylaws, which
govern the rights attached to our Class A common stock. In particular, for so long as GTCR continues to own
a significant percentage of our Class A common stock, GTCR will be able to cause or prevent a change of
control of us or a change in the composition of our Board and could preclude any unsolicited acquisition of
us. The concentration of ownership could deprive you of an opportunity to receive a premium for your shares
of Class A common stock as part of a sale of us and ultimately might affect the market price of our Class A
common stock.
We
entered into a Director Nomination Agreement with GTCR that provides GTCR the right to nominate to the Board
a number of designees equal to at least: (i) 100% of the total number of directors comprising the Board, so
long as GTCR beneficially owns shares of Class A common stock and Class B common stock representing at least
40% of the total amount of shares of Class A common stock and Class B common stock it beneficially owned as
of November 19, 2020, (ii) 40% of the total number of directors, in the event that GTCR beneficially owns
shares of Class A common stock and Class B common stock representing at least 30% but less than 40% of the
total amount of shares of Class A common stock and Class B common stock it owned as of November 19, 2020,
(iii) 30% of the total number of directors, in the event that GTCR beneficially owns shares of Class A
common stock and Class B common stock representing at least 20% but less than 30% of the total amount of
shares of Class A common stock and Class B common stock it owned as of November 19, 2020, (iv) 20% of the
total number of directors, in the event that GTCR beneficially owns shares of Class A common stock and Class
B common stock representing at least 10% but less than 20% of the total amount of shares of Class A common
stock and Class B common stock it owns as of November 19, 2020 and (v) one director, in the event that GTCR
beneficially owns shares of Class A common stock and Class B common stock representing at least 5% of the
total amount of shares of Class A common stock and Class B common stock it owned as of November 19, 2020.
The Director Nomination Agreement provides that GTCR may assign such right to a GTCR
affiliate.
The Director Nomination Agreement prohibits us from increasing or decreasing the size of our Board without
the prior written consent of GTCR.
GTCR
and its affiliates engage in a broad spectrum of activities, including investments in our industry
generally. In the ordinary course of their business activities, GTCR and its affiliates may engage in
activities where their interests conflict with our interests or those of our other shareholders, such as
investing in or advising businesses that directly or indirectly compete with certain portions of our
business or are suppliers or customers of ours. Our certificate of incorporation provides that none of GTCR,
any of its affiliates or any director who is not employed by us (including any non-employee director who
serves as one of our officers in both his or her director and officer capacities) or its affiliates has any
duty to refrain from engaging, directly or indirectly, in the same business activities or similar business
activities or lines of business in which we operate. GTCR also may pursue acquisition opportunities that may
be complementary to our business, and, as a result, those acquisition opportunities may not be available to
us. In addition, GTCR may have an interest in pursuing acquisitions, divestitures and other transactions
that, in its judgment, could enhance its investment, even though such transactions might involve risks to
you or may not prove beneficial.
We
are a “controlled company” within the meaning of the rules of NASDAQ and, as a result, we
qualify for and rely on exemptions from certain corporate governance requirements. You will not have the
same protections as those afforded to shareholders of companies that are subject to such governance
requirements.
Currently,
GTCR controls a majority of the voting power of our outstanding common stock. As a result, we are a
“controlled company” within the meaning of the corporate governance requirements of NASDAQ.
Under these rules, a company of which more than 50% of the voting power for the election of directors is
held by an individual, group or another company is a “controlled company” and may elect not to
comply with certain corporate governance requirements of NASDAQ, including:
•the
requirement that a majority of our Board is composed of “independent directors” as defined under
NASDAQ rules;
•the
requirement that we have a nominations committee that is composed entirely of independent directors;
and
•the
requirement that we have a compensation committee that is composed entirely of independent directors.
From
time to time, we may rely on these exceptions. Although a majority of our Board is currently composed of
independent directors, neither our Compensation and Leadership Development Committee, nor our Nominating,
Governance and Risk Committee, consists entirely of independent directors. Accordingly, you may not have the
same protections afforded to shareholders of companies that are subject to all of the corporate governance
requirements of NASDAQ.
Provisions
of our corporate governance documents could make an acquisition of us more difficult and may prevent
attempts by our shareholders to replace or remove our current management, even if beneficial to our
shareholders.
Our
certificate of incorporation and bylaws and the Delaware General Corporation Law (the “DGCL”)
contain provisions that could make it more difficult for a third party to acquire us, even if doing so might
be beneficial to our shareholders. Among other things:
•these
provisions allow us to authorize the issuance of undesignated preferred stock, the terms of which may be
established and the shares of which may be issued without shareholder approval, and which may include
supermajority voting, special approval, dividend, or other rights or preferences superior to the rights of
shareholders;
•these
provisions provide for a classified board of directors with staggered three-year terms;
•these
provisions provide that, at any time when GTCR controls, in the aggregate, less than 40% of the outstanding
shares of our Class A common stock, directors may only be removed for cause, and only by the affirmative
vote of holders of at least 66 2⁄3% in voting power of all the then-outstanding shares of our stock
entitled to vote thereon, voting together as a single class;
•these
provisions prohibit shareholder action by written consent from and after the date on which GTCR controls, in
the aggregate, less than 35% in voting power of our stock entitled to vote generally in the election of
directors;
•these
provisions provide that for as long as GTCR controls, in the aggregate, at least 50% in voting power of our
stock entitled to vote generally in the election of directors, any amendment, alteration, rescission or
repeal of our bylaws by our shareholders will require the affirmative vote of a majority in voting power of
the outstanding shares of our capital stock and at any time when GTCR controls, in the aggregate, less than
50% in voting power of all outstanding shares of our stock entitled to vote generally in the election of
directors, any amendment, alteration, rescission or repeal of our bylaws by our shareholders will require
the affirmative vote of the holders of at least 66 2⁄3% in voting power of all the then-outstanding
shares of our stock entitled to vote thereon, voting together as a single class; and
•these
provisions establish advance notice requirements for nominations for elections to our Board or for proposing
matters that can be acted upon by shareholders at shareholder meetings; provided, however, at any time when
GTCR controls, in the aggregate, at least 10% in voting power of our stock entitled to vote generally in the
election of directors, such advance notice procedure will not apply to GTCR.
We
opted out of Section 203 of the DGCL, which generally prohibits a Delaware corporation from engaging in any
of a broad range of business combinations with any interested shareholder for a period of three years
following the date on which the shareholder became an interested shareholder. However, our certificate of
incorporation contains a provision that provides us with protections similar to Section 203, and prevents us
from engaging in a business combination with a person (excluding GTCR and any of its direct or indirect
transferees and any group as to which such persons are a party) who acquires at least 85% of our Class A
common stock for a period of three years from the date such person acquired such common stock, unless board
or shareholder approval is obtained prior to the acquisition. These provisions could discourage, delay or
prevent a transaction involving a change in control of our company. These provisions could also discourage
proxy contests and make it more difficult for you and other shareholders to elect directors of your choosing
and cause us to take other corporate actions you desire, including actions that you may deem advantageous,
or negatively affect the trading price of our Class A common stock. In addition, because our Board is
responsible for appointing the members of our management team, these provisions could in turn affect any
attempt by our shareholders to replace current members of our management team.
These
and other provisions in our certificate of incorporation, bylaws and Delaware law could make it more
difficult for shareholders or potential acquirers to obtain control of our Board or initiate actions that
are opposed by our then-current Board, including actions to delay or impede a merger, tender offer or proxy
contest involving our company. The existence of these provisions could negatively affect the price of our
Class A common stock and limit opportunities for you to realize value in a corporate transaction.
Our
certificate of incorporation designates the Court of Chancery of the State of Delaware as the exclusive
forum for certain litigation that may be initiated by our shareholders and the federal district courts of
the United States as the exclusive forum for litigation arising under the Securities Act, which could limit
our shareholders’ ability to obtain a favorable judicial forum for disputes with us.
Pursuant
to our certificate of incorporation, unless we consent in writing to the selection of an alternative forum,
the Court of Chancery of the State of Delaware is the sole and exclusive forum for any claims in state court
for (1) any derivative action or proceeding brought on our behalf, (2) any action asserting a claim of
breach of a fiduciary duty owed by any of our directors, officers or other employees to us or our
shareholders, (3) any action asserting a claim against us arising pursuant to any provision of the DGCL, our
certificate of incorporation or our bylaws or (4) any other action asserting a claim against us that is
governed by the internal affairs doctrine; provided that for the avoidance of doubt, the forum selection
provision that identifies the Court of Chancery of the State of Delaware as the exclusive forum for certain
litigation, including any “derivative action,” will not apply to suits to enforce a duty or
liability created by the Securities Act of 1933, as amended (the “Securities Act”), the
Securities Exchange Act of 1934, as amended (the “Exchange Act”) or any other claim for which
the federal courts have exclusive jurisdiction. Our certificate of incorporation also provides that, unless
we consent in writing to the selection of an alternative forum, the federal district courts of the United
States shall be the exclusive forum for the resolution of any complaint asserting a cause of action arising
under the Securities Act. Our certificate of incorporation further provides that any person or entity
purchasing or otherwise acquiring any interest in shares of our capital stock is deemed to have notice of
and consented to the provisions of our certificate of incorporation described above. The forum selection
provisions in our certificate of incorporation may have the effect of discouraging lawsuits against us or
our directors and officers and may limit our shareholders’ ability to obtain a favorable judicial
forum for disputes with us. If the enforceability of our forum selection provisions were to be challenged,
we may incur additional costs associated with resolving such challenge. While we currently have no basis to
expect any such challenge would be successful, if a court were to find our forum selection provisions to be
inapplicable or unenforceable with respect to one or more of these specified types of actions or
proceedings, we may incur additional costs associated with having to litigate in other jurisdictions, which
could have an adverse effect on our business, financial condition, results of operations, cash flows and
prospects and result in a diversion of the time and resources of our employees, management and board of
directors.
If
our existing investors sell a significant portion of our total outstanding shares of Class A common stock,
the market price of our Class A common stock could drop significantly, even if our business is doing
well.
Sales
of a substantial number of shares of our Class A common stock in the public market could occur at any time.
As of December 31, 2024, we had 141,976,348 outstanding shares of Class A common stock, 20,150,005 of
which were held by MLSH 2, and further, as of December 31, 2024, an additional 110,684,080 shares of
Class A common stock are issuable upon the exchange by MLSH 1 of its interest in Topco. Because each of MLSH
1 and MLSH 2 is controlled by GTCR and is considered an “affiliate” of ours, the shares of Class
A common stock held by MLSH 1 and MLSH 2 are subject to certain
restrictions
on resale imposed by U.S. federal securities laws. However, pursuant to a registration rights agreement,
MLSH 1 and MLSH 2 have the right to request that we register these shares in which case the shares would be
able to be freely sold in the public market without such restrictions. These sales, or the perception in the
market that the holders of a large number of shares of Class A common stock intend to sell shares, could
reduce the market price of our Class A common stock.
Because
we have no current plans to pay regular cash dividends on our Class A common, you may not receive any return
on investment unless you sell your Class A common stock for a price greater than that which you paid for
it.
We
do not anticipate paying any regular cash dividends on our Class A common stock. Any decision to declare and
pay dividends in the future will be made at the discretion of our Board and will depend on, among other
things, our results of operations, financial condition, cash requirements, contractual restrictions and
other factors that our Board may deem relevant. In addition, our ability to pay dividends is, and may be,
limited by covenants of existing and any future outstanding indebtedness we or our subsidiaries incur.
Therefore, any return on investment in our Class A common stock is solely dependent upon the appreciation of
the price of our Class A common stock on the open market, which may not occur.
We
may issue shares of preferred stock in the future, which could make it difficult for another company to
acquire us or could otherwise adversely affect holders of our Class A common stock, which could depress the
price of our Class A common stock.
Our
certificate of incorporation authorizes us to issue one or more series of preferred stock. Our Board has the
authority to determine the preferences, limitations and relative rights of the shares of preferred stock and
to fix the number of shares constituting any series and the designation of such series, without any further
vote or action by our shareholders. Our preferred stock could be issued with voting, liquidation, dividend
and other rights superior to the rights of our Class A common stock. The potential issuance of preferred
stock may delay or prevent a change in control of us, discouraging bids for our Class A common stock at a
premium to the market price, and materially adversely affect the market price and the voting and other
rights of the holders of our Class A common stock.
Item
1B. Unresolved Staff Comments
None.
Item
1C. Cybersecurity
Risk
Management and Strategy
Our
cybersecurity risk management processes include technical security controls, policy enforcement
mechanisms, monitoring systems, contractual arrangements, tools and related services, and management
oversight to assess, identify and manage risks from cybersecurity threats. We implement risk-based controls to protect our information,
information systems, business operations, and products and related services. We
have adopted security-control principles based on the National Institute of Standards and Technology
Cybersecurity Framework (“NIST”), other global standards, and contractual requirements,
as applicable. We also leverage government partnerships, industry and government associations,
third-party benchmarking, audits, threat intelligence feeds, and other similar resources to inform
our cybersecurity efforts and allocate resources.
We
maintain an information security program that includes physical, administrative and technical
safeguards, and we maintain plans and procedures whose objective is to help us prevent and timely and
effectively respond to cybersecurity incidents. Through our cybersecurity risk management process, we
continuously monitor cybersecurity vulnerabilities and potential attack vectors and evaluate the
potential operational and financial effects of cybersecurity risk countermeasures made to defend against
such threats. This process has been integrated into our Enterprise Risk Management program and our
Compliance Risk Management program, both of which are overseen by our Board of Directors. In addition, we engage third-party consultants to assist us in assessing, enhancing,
implementing, and monitoring our cybersecurity risk management programs, including conducting
penetration testing, phishing campaigns, and vulnerability assessments, and responding to any
incidents.
We also assess the risks from cybersecurity threats of our
suppliers and third-party service providers. We also require our suppliers and third-party service
providers to adopt security-control principles based on NIST or similar global standards.
We
have experienced, and may in the future experience, whether directly or through our supply chain or
other channels, cybersecurity incidents. While prior incidents have not had a material impact on us,
future incidents could have a material impact on our business, operations, and reputation. Although
our cybersecurity risk management processes are designed to help prevent, detect, respond to, and
mitigate the impact of such incidents, there is no guarantee that they will be sufficient to prevent
or mitigate the risk of a cyberattack or the potentially serious reputational, operational, legal or
financial impacts that may result. See “Our
internal computer systems, or those of our customers, collaborators or other contractors, have been and
may
in
the future be subject to cyber-attacks or security breaches, which could result in a material disruption
of our product development programs or otherwise adversely affect our business, financial condition,
results of operations, cash flows and prospects”
within Item 1A, “Risk Factors” in this Annual Report on Form 10-K.
Governance
Our Board has overall responsibility for risk oversight. Oversight of certain of the
Company’s key risks is specifically allocated to Board committees based on their respective
areas of expertise. The Nominating, Governance and Risk Committee assists the Board
in overseeing risks specific to cybersecurity. Pursuant to its written charter, the Nominating,
Governance and Risk Committee is charged with overseeing our management’s efforts to identify,
evaluate and mitigate major risks related to cybersecurity, data protection controls, business
continuity/disaster recovery systems and other information security matters, and periodically reviews
our approach to the identification, evaluation and mitigation of such risks with the Board.
Our Vice President, Information Technology (“VP
of IT”), together with our General Counsel, briefs the
Nominating, Governance and Risk Committee on cybersecurity risks at selected meetings.
These briefings include assessments of the threat landscape, updates on
incidents, and reports on our investments in cybersecurity risk mitigation and governance. To
the extent that a significant cybersecurity event occurs, the Nominating, Governance and Risk
Committee would also receive periodic updates from senior management, including the VP of IT,
the General Counsel, and the relevant Company third-party consultants on any significant
cybersecurity events. Such updates would include, as applicable and relevant, the nature, scope
and timing of the event; the type and scale of information or data has been accessed,
exfiltrated or encrypted; the systems involved; what is known about the threat actor, such as
capabilities and demands, if any; management’s ongoing assessment of the impacts or likely
impacts of the intrusion; the possibility of litigation or regulatory investigations or actions;
and any other information that management finds relevant and that would aid in the assessment of
the materiality of the impact of the intrusion.
Our
Information Technology (IT) Department and Legal Department work together and are jointly
responsible for developing and coordinating our enterprise-wide cybersecurity policy and strategy,
including managing our cybersecurity risk management processes. The VP of IT and the General Counsel
report to the Company’s senior leadership team on progress towards specific cybersecurity
objectives.
Vijay Mani is our VP of IT. He is responsible for managing our information security, developing
cybersecurity strategy, and implementing effective information and cybersecurity programs. Mr. Mani has
16 years of experience working in leadership roles in information technology, as well as relevant
degrees and certifications, including an Advanced Computer Security Certificate from Stanford
University. He reports directly to our Chief Financial Officer and meets periodically with the
Nominating, Governance and Risk Committee.
Item
2. Properties
Our
corporate headquarters and certain of our research and development operations are located in San Diego,
California. The facilities serve as the principal hub of operations for our nucleic acid production business
and were purpose built to expand the capacity of this business segment while adding specialized capabilities
in the form of clean rooms, air handling, waste and solvent handling, and GMP capabilities. Our facility
leases expire at varying dates through 2038, not including renewals that are at our option.
All
facilities are leased. A summary of our facilities is listed below.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Location
|
|
Approx.
Square Footage |
|
Segment
|
|
San
Diego, CA |
|
237,000
|
|
Nucleic
Acid Production |
|
Sterling,
VA |
|
21,000
|
|
Nucleic
Acid Production |
|
Leland,
NC |
|
46,000
|
|
Biologics
Safety Testing |
|
Southport,
NC |
|
20,000
|
|
Biologics
Safety Testing |
|
Jupiter,
FL
|
|
17,000
|
|
Nucleic
Acid Production |
Item
3. Legal Proceedings
From
time to time, we may be involved in various legal proceedings and subject to claims that arise in the
ordinary course of business. Although the results of litigation and claims are inherently unpredictable and
uncertain, we are not currently a party to any legal proceedings the outcome of which, if determined
adversely to us, are believed to, either individually or taken together, have a material adverse effect on
our business, operating results, cash flows or financial condition. Regardless of the outcome, litigation
has the potential to have an adverse impact on us because of defense and settlement costs, diversion of
management resources, and other factors. See Item 1A. “Risk Factors—Risks Related to Our
Intellectual Property—Intellectual property
litigation
and other proceedings could cause us to spend substantial resources and distract our personnel from their
normal responsibilities” and “Risk Factors—Risks Related to Our Intellectual
Property—If we are sued for infringing, misappropriating, or otherwise violating intellectual property
rights of third parties, such litigation could be costly and time consuming and could prevent or delay us
from developing or commercializing our current or future products.”
Item
4. Mine Safety Disclosures
Not
applicable.
Part
II.
Item
5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities
Market
Information
Our
Class A common stock trades on The Nasdaq Global Select Market under the symbol “MRVI.”
Our
Class B common stock is not listed nor traded on any stock exchange.
Stock
Performance Graph
The
following graph shows the total stockholder’s return on an investment of $100 in cash at market close
on November 20, 2020 (the first day of trading of our common stock), through December 31, 2024 for (i)
our Class A common stock, (ii) the Nasdaq Composite Index and (iii) the Nasdaq Biotechnology Index. Pursuant
to applicable Securities and Exchange Commission rules, all values assume reinvestment of pre-tax amount of
all dividends; however, no dividends have been declared on our Class A common stock to date. The stockholder
return shown in the graph below may not be indicative of future stock price performance, and we do not make
or endorse any predictions as to future stockholder return. This graph shall not be deemed “soliciting
material” or be deemed “filed” for purposes of Section 18 of the Exchange Act, or
otherwise subject to the liabilities under that Section, and shall not be deemed to be incorporated by
reference into any of our filings under the Securities Act whether made before or after the date hereof and
irrespective of any general incorporation language in any such filing.

Holders
of Common Stock
As
of March 11, 2025, there were two holders of record of our Class A common stock. This number does not
include a greater number of beneficial holders of our Class A common stock whose shares are held by clearing
houses, banks, brokers and other financial institutions which are aggregated into a single holder of record.
As
of March 11, 2025, there was one holder of record of our Class B common stock.
Dividend
Policy
We
currently intend to retain all available funds and any future earnings to fund the development and growth of
our business and to repay indebtedness and, therefore, we do not anticipate paying any cash dividends in the
foreseeable future. Additionally,
because
we are a holding company, our ability to pay dividends on our Class A common stock may be limited by
restrictions on the ability of our subsidiaries to pay dividends or make distributions to us. Any future
determination to pay dividends will be at the discretion of our Board, subject to compliance with covenants
in current and future agreements governing our and our subsidiaries’ indebtedness, including our
credit agreement, and will depend on our results of operations, financial conditions, capital requirements
and other factors that our Board deems relevant.
Equity
Compensation Plan Information
The
following table sets forth information as of December 31, 2024 regarding shares of our Class A common
stock that may be issued under the Company’s equity compensation plans, consisting of our 2020 Omnibus
Incentive Plan and our 2020 Employee Stock Purchase Plan.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Plan
Category |
|
Number
of securities to be issued upon exercise of outstanding options, warrants and rights (a)
|
|
Weighted-average
exercise price of outstanding options, warrants and rights |
|
Number
of securities available for future issuance under equity compensation plans (excluding
securities reflected in column (a)) |
|
Equity
compensation plans approved by security holders (1)
(2)
|
|
11,023,468
|
|
$
|
6.01
|
|
|
62,828,656
|
|
Total
|
|
11,023,468
|
|
$
|
6.01
|
|
|
62,828,656
|
____________________
(1)Includes
10,215,364 shares of our Class A common stock that remain available for purchase under the 2020 Employee
Stock Purchase Plan and 65,088,616 shares of our Class A common stock that remain available for grant under
the 2020 Omnibus Incentive Plan. The 2020 Omnibus Incentive Plan provides for an automatic increase in the
number of shares reserved for issuance thereunder on January 1 of each calendar year during the term of the
Plan, equal to the lesser of (a) 4.0% of the aggregate number of shares and shares of Class B common stock
outstanding on the final day of the immediately preceding calendar year and (b) such smaller number of
shares as determined by our Board of Directors (the “Board”). The 2020 Employee Stock Purchase
Plan also provides for an automatic increase in the number of shares reserved for issuance thereunder on
January 1 of each calendar year during the term of the plan, equal to the lesser of (a) 1.25% of the
aggregate number of shares and shares of Class B common stock outstanding on the final day of the
immediately preceding calendar year and (b) such smaller number of shares as is determined by the Board,
provided that the shares reserved under the ESPP shall not exceed an aggregate of 10,948,877 shares of our
Class A common stock.
(2)The
weighted average exercise price includes restricted stock unit and performance stock unit awards that can be
exercised for no consideration. The weighted average exercise price excluding these restricted stock units
and performance stock units is $20.18.
Item
6. Reserved
Item
7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
You
should read the following discussion and analysis of financial condition and results of operations together
with our audited consolidated financial statements and related notes included elsewhere in this Annual
Report on Form 10-K. This discussion and analysis reflects our historical consolidated results of operations
and financial position, and contains forward-looking statements that involve risks and uncertainties. Our
actual results could differ materially from those discussed in or implied by these forward-looking
statements. Factors that could cause or contribute to such differences include, but are not limited to,
those discussed in Item 1A. “Risk Factors.” Please also see the section titled “Special
Note Regarding Forward Looking Statements.” We were incorporated in August 2020 and, pursuant to the
organizational transactions described in Note 1 to our consolidated financial statements, became a holding
company whose principal asset is a controlling equity interest in Topco LLC. As the sole managing member of
Topco LLC, we operate and control the business and affairs of Topco LLC and its subsidiaries. Accordingly,
we consolidate Topco LLC in our consolidated financial statements and report a non-controlling interest
related to the portion of Topco LLC not owned by us. Because the organizational transactions were considered
transactions between entities under common control, the consolidated financial statements for periods prior
to the organizational transactions and the initial public offering have been adjusted to combine the
previously separate entities for presentation purposes. Unless otherwise noted or the context otherwise
requires, references in this Annual Report on Form 10-K to “we,” “us” or
“our” refer to Maravai LifeSciences Holdings, Inc. and its subsidiaries.
This
discussion and analysis generally addresses 2024 and 2023 items and year-over-year comparisons between 2024
and 2023. Discussions of 2022 items and year-over-year comparisons between 2023 and 2022 that are not
included in this Annual Report on Form 10-K can be found in Part II, Item 7 of our 2023 Annual Report on
Form 10-K filed with the SEC on February 29, 2024.
Overview
We
are a leading life sciences company providing critical products to enable the development of drug therapies,
diagnostics, novel vaccines and support research on human diseases. Our customers include the top global
biopharmaceutical companies ranked by research and development expenditures according to industry
consultants, and many other emerging biopharmaceutical and life sciences research companies, as well as
leading academic research institutions and in
vitro
diagnostics companies. Our products address the key phases of biopharmaceutical development and include
complex nucleic acids for diagnostic and therapeutic applications and antibody-based products to detect
impurities during the production of biopharmaceutical products.
We
have and will continue to build a transformative life sciences products company by acquiring businesses and
accelerating their growth through capital infusions and industry expertise. Biomedical innovation is
dependent on a reliable supply of reagents in the fields of nucleic acid production and biologics safety
testing. From inventive startups to the world’s leading biopharmaceutical, vaccine, diagnostics and
gene and cell therapy companies, these customers turn to us to solve their complex discovery challenges and
help them streamline and scale their supply chain needs beginning from research and development through
clinical trials to commercialization.
Our
primary end customers are biopharmaceutical companies who are pursuing novel research and product
development programs. Our customers also include a range of government, academic and biotechnology
institutions.
As
of December 31, 2024, we employed a team of over
570 full-time
employees, approximately
28% of
whom have advanced degrees.
We
primarily utilize a direct sales model for our sales to our customers in North America. Our international
sales, primarily in Europe and Asia Pacific, are through a combination of third-party distributors as well
as via a direct sales model. The percentage of our total revenue derived from customers in North America was
49.0% and 48.8% for the years ended December 31, 2024 and 2023, respectively.
We
generated revenue of $259.2 million and $288.9 million for the years ended December 31, 2024 and 2023,
respectively.
Total
revenue by segment was $196.3 million in Nucleic Acid Production and $62.8 million in Biologics Safety
Testing for the year ended December 31, 2024. Total revenue by segment was $224.8 million in Nucleic
Acid Production and $64.2 million in Biologics Safety Testing for the year ended December 31, 2023.
We
focus a substantial portion of our resources supporting our core business segments. We are actively pursuing
opportunities to expand our customer base both domestically and internationally by fostering strong
relationships with both existing and new customers and distributors. Our management team has experience
working with biopharmaceutical, vaccine, diagnostics and gene and cell therapy companies as well as academic
and research scientists. We also intend to continue making investments in our overall infrastructure and
business segments to support our growth. We incurred aggregate selling, general, and administrative expenses
of $161.8 million and $151.4 million for the years ended December 31, 2024 and 2023,
respectively.
Our
research and development efforts are geared towards meeting our customers’ needs. We incurred research
and development expenses of $19.2 million and $17.3 million for the years ended December 31, 2024 and
2023, respectively. We intend to continue to invest in research and development and new products and
technologies to support our customers’ needs for the foreseeable future.
2024
and Recent Developments
Goodwill
Impairment
In
connection with preparing our financial statements for the third quarter of 2024, we tested our reporting
units for potential goodwill impairment in response to impairment indicators identified during our
forecasting process. We revised our long-term forecast to reflect lower projected near-term revenues due to
lower demand in research and discovery products within our Nucleic Acid Production business. This revision
also considered the slower than expected transition to new mRNA clinical trials as customers prioritize
existing programs and more conservatively invest in new programs as the results of continued macroeconomic
pressures. As such, we performed a quantitative goodwill impairment test on each of our four reporting units
and as a result, we concluded that the TriLink reporting unit, which is contained in the Nucleic Acid
Production segment, had a carrying value that exceeded its estimated fair value. As a result, we recorded
goodwill impairment of $154.2 million on the consolidated statements of operations, which was the entire
goodwill balance at the TriLink reporting unit. No impairment was recorded for any of our remaining three
reporting units.
In
connection with preparing our financial statements for the year ended December 31, 2024, we tested our
reporting units for potential goodwill impairment in response to impairment indicators identified during our
forecast process and the sustained
decline
in our stock price. As of December 31, 2024, we revised our long-term forecast to reflect lower
projected near-term revenues due to lower demand in enzyme products within our Nucleic Acid Production
business. As such, we performed a quantitative goodwill impairment test on each of our reporting units with
goodwill as of December 31, 2024, and as a result, we concluded that the Alphazyme reporting unit, which is
contained in the Nucleic Acid Production segment, had a carrying value that exceeded its estimated fair
value. As a result, we recorded goodwill impairment of $11.9 million on the consolidated statements of
operations. No impairment was recorded for any of our other reporting units at that time.
See
Note 4 to our consolidated financial statements for additional information.
Voluntary
Prepayments on Term Loan
In
December 2024, we voluntarily pre-paid, using cash on hand, $228.0 million of aggregate principal amount of
the $600.0 million term loan facility provided under our credit agreement (“Term Loan”). There
were no prepayment penalties associated with this prepayment of principal. As a result of the prepayment, we
wrote off a portion of pre-existing deferred financing costs associated with the Term Loan.
Acquisition
of Assets and Intellectual Property from Molecular Assemblies
In
January 2025, we acquired assets and intellectual property from Molecular Assemblies, expanding
TriLink’s ability to enable customers to develop next-generation mRNA and clustered regularly
interspaced short palindromic repeats nucleic acid-based therapies. The total consideration for this
acquisition was a purchase price of $11.5 million, subject to customary post-closing adjustments.
Acquisition
of Officinae Bio
In
February 2025, we completed the acquisition of the DNA and RNA business of Officinae Bio
(“Officinae”), a privately held technology company with a proprietary digital platform designed
with artificial intelligence and machine learning capabilities to support the biological design of
therapeutics. The total consideration to acquire Officinae consisted of a base cash provisional purchase
price of $10.0 million, subject to customary post-closing adjustments, and potential contingent
consideration payments of up to $35.0 million, with $5.0 million of such contingent consideration payable in
cash upon the achievement of a certain milestone and up to an additional $30.0 million payable in a mix of
cash and shares of our Class A common stock upon the achievement of certain milestones.
Trends
and Uncertainties
Our
results of operations and cash flows substantially benefit from high-volume sales of our proprietary
CleanCap® analogs for commercial phase vaccine programs. We estimate that revenue from high-volume
sales of CleanCap for commercial phase vaccine programs represented approximately 25.4% and 21.0% of our
total revenues for the years ended December 31, 2024 and 2023, respectively. The amount, timing and
durability of future high-volume CleanCap orders have become increasingly difficult to forecast because
historical customers for such orders have been unable or unwilling to provide visibility into their
anticipated future needs and plans to purchase CleanCap. If high-volume orders for CleanCap do not
materialize in the future at similar or greater levels than they have in the past it will significantly
decrease our revenue and cash flow which, in turn, could have a material adverse impact on our operating
results and financial condition in the future.
While
we believe that the long-term trend of biopharmaceutical customers relying on outside parties to provide
important inputs and services for their clinical research and manufacturing remains a long-term growth
driver for us, lower demand for research and discovery products within our Nucleic Acid Production business
coupled with slower than expected mRNA clinical trial progressions negatively impacted our revenue and
operating results in the year ended December 31, 2024, which trend may continue and result in slower
growth and/or cause a further decline in our revenues in the future.
Our
businesses also continue to see headwinds from a general contraction in economic activity in Asia,
particularly in China, which may negatively impact our revenue derived from those markets. See more
information under Part I, Item 1. Business.
How
We Assess Our Business
We
consider a variety of financial and operating measures in assessing the performance of our business. The key
measures we use to determine how our business is performing are revenue and Adjusted EBITDA.
Adjusted
EBITDA is a non-GAAP financial performance measure that we define as net (loss) income adjusted for
interest, provision for income taxes, depreciation, amortization and stock-based compensation expenses.
Adjusted EBITDA reflects further adjustments to eliminate the impact of certain items, including certain
non-cash and other items, that we do not consider representative of our ongoing operating performance.
Management
uses Adjusted EBITDA to evaluate the financial performance of our business and the effectiveness of our
business strategies. We present Adjusted EBITDA because we believe this performance measure is frequently
used by analysts, investors and other interested parties to evaluate companies in our industry and they
facilitate comparisons of performance on a consistent basis across reporting periods. Further, we believe
this performance measure is helpful in highlighting trends in our operating results because it excludes
items that are not indicative of our core operating performance. Adjusted EBITDA is also a component of the
financial covenant under our credit agreement that governs our ability to access more than $58.5 million in
aggregate letters of credit and available borrowings under the $167.0 million revolving credit facility
provided under our credit agreement (the “Revolving Credit Facility”). In addition, if we borrow
more than $58.5 million under the Revolving Credit Facility, we are required to maintain a specified net
leverage ratio. See “Liquidity
and Capital Resources—Credit Agreement”
below for a discussion of this financial covenant.
Adjusted
EBITDA is not a GAAP-based measure and therefore, may have limitations as an analytical tool and you should
not consider it in isolation, or as a substitute for analysis of our results as reported under GAAP. We may
in the future incur expenses similar to the adjustments in the presentation of Adjusted EBITDA. In
particular, we expect to incur meaningful share-based compensation expense in the future. Other limitations
include that Adjusted EBITDA do not reflect:
•all
expenditures or future requirements for capital expenditures or contractual commitments;
•changes
in our working capital needs;
•provision
for income taxes, which may be a necessary element of our costs and ability to operate;
•the
costs of replacing the assets being depreciated, which will often have to be replaced in the future;
•the
non-cash component of employee compensation expense; and
•the
impact of earnings or charges resulting from matters we consider not to be reflective, on a recurring basis,
of our ongoing operations.
In
addition, Adjusted EBITDA is not a measure of financial performance under GAAP and may not be comparable to
similarly titled measures used by other companies in our industry or across different industries.
Components
of Results of Operations
Revenue
Our
revenue consists primarily of product revenue and, to a much lesser extent, service revenue. We generated
total consolidated revenue of $259.2 million and $288.9 million for the years ended December 31, 2024
and 2023, respectively, through the following segments: (i) Nucleic Acid Production and
(ii) Biologics Safety Testing.
Nucleic
Acid Production Segment
Our
Nucleic Acid Production segment focuses on the manufacturing and sale of highly modified nucleic acids
products to support the needs of customers’ research, therapeutic and vaccine programs. This segment
also provides research products for labeling and detecting proteins in cells and tissue samples.
Biologics
Safety Testing Segment
Our
Biologics Safety Testing segment focuses on manufacturing and selling biologics safety and impurity tests
and assay development services that are utilized by our customers in their biologic drug manufacturing
activities.
Cost
of Revenue
Cost
of revenue associated with our products primarily consists of manufacturing related costs incurred in the
production process, including personnel and related costs, stock-based compensation expense, inventory
write-downs, costs of materials, labor and overhead, packaging and delivery costs and allocated costs,
including facilities, information technology, depreciation, and amortization of intangibles. Cost of revenue
also includes adjustments for excess, obsolete or expired inventory, and idle capacity. Cost of revenue
associated with our services primarily consists of personnel and related costs, stock-based compensation
expense, cost of materials and allocated costs, including facilities and information technology costs. Costs
of services were not material for the years ended December 31, 2024 and 2023.
Operating
Expenses
Selling,
General and Administrative
Our
selling, general and administrative expenses primarily consist of salaries, benefits and stock-based
compensation expense for our employees in our commercial sales functions, marketing, executive, accounting
and finance, legal and human resource functions as well as travel expenses, professional services fees, such
as consulting, audit, tax and legal fees, general corporate costs and allocated costs, including facilities,
information technology and amortization of intangibles.
We
expect that our selling, general and administrative expenses will gradually increase in future periods,
primarily due to expanding facilities footprint to support anticipated long-term growth in the business,
costs incurred in increasing our presence globally, and increases in marketing activities to drive awareness
and adoption of our products and services.
Research
and Development
Research
and development costs primarily consist of salaries, benefits, stock-based compensation expense, outside
contracted services, cost of supplies, in-process research and development costs from asset acquisitions and
allocated facilities costs for employees engaged in research and development of products and services. We
expense all research and development costs in the period in which they are incurred. Payment made prior to
the receipt of goods or services to be used in research and development are recognized as prepaid assets
until the goods are received or services are rendered.
We
expect our research and development costs will increase to support our research and development efforts,
including meeting our customers’ needs.
Change
in Estimated Fair Value of Contingent Consideration
Change
in estimated fair value of contingent consideration consists of fair value adjustments to contingent
consideration liabilities associated with completed acquisitions. These adjustments are based on our
assessment of the probability of achieving certain revenue thresholds and other probability factors.
Goodwill
Impairment
Goodwill
impairment is recorded in connection with the impairment testing of our goodwill, and is performed at least
annually and more frequently if changes in facts and circumstances indicate that the fair value of our
reporting units may be less than their carrying amount. In connection with the preparation of our financial
statements for the third and fourth quarters of 2024, we performed quantitative goodwill impairment tests
which resulted in a total goodwill impairment of $166.2 million. See Note 4 to our consolidated financial
statements for additional information.
Restructuring
Restructuring
costs primarily consist of severance and other employee-related costs, facility and other exit costs,
professional fees and other restructuring costs resulting from the Cost Realignment Plan, which was
implemented in November 2023. See Note 3 to our consolidated financial statements for additional
information.
Other
Income (Expense)
Interest
Expense
Interest
expense consists of interest costs and the related amortization of the debt discount and deferred issuance
costs on our outstanding debt, changes in the fair value of our interest rate cap agreement, and interest
costs on our finance lease liabilities.
Interest
Income
Interest
income consists of interest earned on our cash balances and short-term investments in money market funds
held at financial institutions.
Loss
on extinguishment of debt
Loss
on extinguishment of debt represents the write-off of remaining unamortized debt issuance costs in
connection with the voluntary partial prepayment of our Term Loan and the write-off of capitalized financing
costs for the refinancing of our revolving credit facility.
Change
in Payable to Related Parties Pursuant to the Tax Receivable Agreement
During
the years ended December 31, 2024 and 2023, we determined that making a payment under the Tax
Receivable Agreement for subsequent years was not probable under Accounting
Standards Codification 450 - Contingencies
as a result of a valuation allowance having been recorded against our deferred tax assets, and therefore,
that it is more likely than not that we will not generate sufficient future taxable income to utilize
related tax benefits that would result in a payment under the Tax Receivable Agreement. As a result, we
remeasured the non-current portion of the liability due under the Tax Receivable Agreement to zero as of
December 31, 2023 and recorded a corresponding gain on Tax Receivable Agreement liability
remeasurement. There have been no changes to our position as of December 31, 2024.
Other
Income (Expense)
Other
income (expense) primarily consists of adjustments to the indemnification asset recorded in connection with
the acquisition of MyChem, LLC, which was completed in January 2022.
Income
Tax Expense (Benefit)
As
a result of our ownership of LLC Units in Topco LLC, we are subject to U.S. federal, state and local income
taxes with respect to our allocable share of any taxable income of Topco LLC and will be taxed at the
prevailing corporate tax rates. In addition, we evaluate the realizability of our deferred tax assets on a
quarterly basis and establish valuation allowances when it is more likely than not that all or a portion of
a deferred tax asset may not be realized. During the year ended December 31, 2023, we recognized a full
valuation allowance against our deferred tax assets and recorded a corresponding income tax expense. There
have been no changes to our position as of December 31, 2024.
Non-Controlling
Interests
Non-controlling
interests represent the portion of profit or loss, net assets and comprehensive income or loss of our
consolidated subsidiaries that is not allocable to the Company based on our percentage of ownership of such
entities. Income
or loss attributed to the non-controlling interests is based on the LLC Units outstanding during the period
and is presented on the consolidated statements of operations. As of December 31, 2024, we held
approximately 56.2% of the outstanding LLC Units of Topco LLC, and MLSH 1 held approximately 43.8% of the
outstanding LLC Units of Topco LLC.
Results
of Operations
The
results of operations presented below should be reviewed in conjunction with the consolidated financial
statements and notes included elsewhere in this Annual Report on Form 10-K.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December
31, |
|
2024
|
|
2023
|
|
Year-Over-Year
Change
|
|
(in
thousands, except per share data) |
|
|
|
Revenue
|
$
|
259,185
|
|
|
$
|
288,945
|
|
|
(10.3)
|
%
|
|
Operating
expenses: |
|
|
|
|
|
|
Cost
of revenue (1)
|
150,876
|
|
|
148,743
|
|
|
1.4
|
%
|
|
Selling,
general and administrative (1)
|
161,771
|
|
|
151,390
|
|
|
6.9
|
%
|
|
Research
and development (1)
|
19,221
|
|
|
17,280
|
|
|
11.2
|
%
|
|
Change
in estimated fair value of contingent consideration |
(2,003)
|
|
|
(3,286)
|
|
|
(39.0)
|
%
|
|
Goodwill
impairment
|
166,151
|
|
|
—
|
|
|
*
|
|
Restructuring
(1)
|
(1,214)
|
|
|
6,466
|
|
|
*
|
|
Total
operating expenses |
494,802
|
|
|
320,593
|
|
|
54.3
|
%
|
|
Loss
from operations
|
(235,617)
|
|
|
(31,648)
|
|
|
644.5
|
%
|
|
Other
(expense) income, net
|
(25,865)
|
|
|
649,384
|
|
|
(104.0)
|
%
|
|
(Loss)
income before income taxes
|
(261,482)
|
|
|
617,736
|
|
|
(142.3)
|
%
|
|
Income
tax (benefit) expense
|
(1,860)
|
|
|
756,111
|
|
|
(100.2)
|
%
|
|
Net
loss
|
$
|
(259,622)
|
|
|
$
|
(138,375)
|
|
|
87.6
|
%
|
|
Net
loss attributable to non-controlling interests
|
(114,776)
|
|
|
(19,346)
|
|
|
493.3
|
%
|
|
Net
loss attributable to Maravai LifeSciences Holdings, Inc.
|
$
|
(144,846)
|
|
|
$
|
(119,029)
|
|
|
21.7
|
%
|
|
|
|
|
|
|
|
Net
loss per Class A common share attributable to Maravai LifeSciences Holdings, Inc., basic and
diluted |
$
|
(1.05)
|
|
|
$
|
(0.90)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average number of Class A common shares outstanding, basic and diluted |
137,906
|
|
|
131,919
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA (Non-GAAP financial measure) |
$
|
35,922
|
|
|
$
|
65,309
|
|
|
|
____________________
*Not
meaningful
(1)Includes
stock-based compensation expense as follows (in thousands, except percentages):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year
Ended December 31, |
|
2024
|
|
2023
|
|
Year-Over-Year
Change
|
|
Cost
of revenue |
$
|
9,649
|
|
|
$
|
7,324
|
|
|
31.7
|
%
|
|
Selling,
general and administrative |
36,023
|
|
|
24,650
|
|
|
46.1
|
%
|
|
Research
and development |
4,968
|
|
|
2,715
|
|
|
83.0
|
%
|
|
Restructuring
|
(1,225)
|
|
|
(101)
|
|
|
1112.9
|
%
|
|
Total
stock-based compensation expense
|
$
|
49,415
|
|
|
$
|
34,588
|
|
|
42.9
|
%
|
Revenue
Consolidated
revenue by segment was as follows for the periods presented (in thousands, except percentages):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year
Ended December 31, |
|
Percentage
of Revenue |
|
2024
|
|
2023
|
|
Year-Over-Year
Change |
|
2024
|
|
2023
|
|
Nucleic
Acid Production |
$
|
196,345
|
|
|
$
|
224,769
|
|
|
(12.6)
|
%
|
|
75.8
|
%
|
|
77.8
|
%
|
|
Biologics
Safety Testing |
62,840
|
|
|
64,176
|
|
|
(2.1)
|
%
|
|
24.2
|
%
|
|
22.2
|
%
|
|
Total
revenue |
$
|
259,185
|
|
|
$
|
288,945
|
|
|
(10.3)
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
Total
revenue was $259.2 million for the year ended December 31, 2024 compared to $288.9 million for the year
ended December 31, 2023, representing a decrease of $29.8 million, or 10.3%.
Nucleic
Acid Production revenue decreased from $224.8 million for the year ended December 31, 2023 to $196.3
million for the year ended December 31, 2024, representing a decrease of $28.4 million, or 12.6%. The
decrease in Nucleic Acid Production was primarily driven by lower demand for research and discovery
products.
Biologics
Safety Testing revenue decreased from $64.2 million for the year ended December 31, 2023 to $62.8
million for the year ended December 31, 2024, representing a decrease of $1.3 million, or 2.1%. The
decrease was primarily driven by lower demand in the bioprocessing market, particularly in China.
Segment
Information
Management
has determined that adjusted earnings before interest, tax, depreciation and amortization is the profit or
loss measure used to make resource allocation decisions and evaluate segment performance. Adjusted EBITDA
assists management in comparing the segment performance on a consistent basis for purposes of business
decision-making by removing the impact of certain items that management believes do not directly reflect our
core operations and, therefore, are not included in measuring segment performance. We define Adjusted EBITDA
as net (loss) income before interest, taxes, depreciation and amortization, certain non-cash items and other
adjustments that we do not consider in our evaluation of ongoing operating performance from period to
period. Corporate costs, net of eliminations, are managed on a standalone basis and are not allocated to
segments.
We
do not allocate assets to our reportable segments as they are not included in the review performed by our
Chief Operating Decision Maker for purposes of assessing segment performance and allocating
resources.
As
of December 31, 2024, all of our long-lived assets were located within the United States.
The
following schedules include revenue, expenses, and adjusted EBITDA for each of the Company’s
reportable segments for the periods presented (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year
Ended December 31, 2024 |
|
Nucleic Acid
Production |
|
Biologics
Safety Testing |
|
Total
|
|
Revenue
|
$
|
196,345
|
|
$
|
62,840
|
|
$
|
259,185
|
|
|
|
|
|
|
|
Less:
|
|
|
|
|
|
|
Cost
of revenue (1)
|
94,694
|
|
9,918
|
|
|
|
Selling
and marketing (1)
|
20,722
|
|
2,921
|
|
|
|
General
and administrative (1)
|
20,370
|
|
4,197
|
|
|
|
Research
and development (1)
|
9,713
|
|
1,960
|
|
|
|
Other
segment items (2)
|
33
|
|
3
|
|
|
|
Adjusted
EBITDA
|
50,813
|
|
43,841
|
|
$
|
94,654
|
|
Reconciliation
of total reportable segments’ adjusted EBITDA to loss before income taxes
|
|
|
|
|
|
|
Amortization
|
|
|
|
|
(27,531)
|
|
|
Depreciation
|
|
|
|
|
(20,852)
|
|
|
Interest
expense |
|
|
|
|
(47,700)
|
|
|
Interest
income |
|
|
|
|
27,403
|
|
|
Corporate
costs, net of eliminations |
|
|
|
|
(58,732)
|
|
|
Other
adjustments: |
|
|
|
|
|
|
Acquisition
contingent consideration |
|
|
|
|
2,003
|
|
|
Acquisition
integration costs |
|
|
|
|
(5,559)
|
|
|
Stock-based
compensation
|
|
|
|
|
(49,415)
|
|
|
Merger
and acquisition related expenses |
|
|
|
|
(1,728)
|
|
|
|
|
|
|
|
|
Loss
on extinguishment of debt |
|
|
|
|
(3,187)
|
|
|
Acquisition
related tax adjustment |
|
|
|
|
(2,306)
|
|
|
Tax
Receivable Agreement liability adjustment |
|
|
|
|
(40)
|
|
|
|
|
|
|
|
|
Goodwill
impairment
|
|
|
|
|
(166,151)
|
|
|
Restructuring
costs (3)
|
|
|
|
|
(11)
|
|
|
Other
|
|
|
|
|
(2,330)
|
|
|
Loss
before income taxes
|
|
|
|
|
(261,482)
|
|
|
Income
tax benefit
|
|
|
|
|
1,860
|
|
|
Net
loss
|
|
|
|
|
$
|
(259,622)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year
Ended December 31, 2023 |
|
Nucleic Acid
Production |
|
Biologics
Safety Testing |
|
Total
|
|
Revenue
|
$
|
224,769
|
|
$
|
64,176
|
|
$
|
288,945
|
|
Intersegment
revenues |
—
|
|
3
|
|
3
|
|
224,769
|
|
64,179
|
|
288,948
|
|
Elimination
of intersegment revenues
|
|
|
|
|
(3)
|
|
Total
consolidated revenues |
|
|
|
|
$
|
288,945
|
|
|
|
|
|
|
|
Less:
|
|
|
|
|
|
|
Cost
of revenue (1)
|
94,040
|
|
9,620
|
|
|
|
Selling
and marketing (1)
|
18,580
|
|
2,295
|
|
|
|
General
and administrative (1)
|
22,474
|
|
4,242
|
|
|
|
Research
and development (1)
|
7,010
|
|
1,077
|
|
|
|
Other
segment items (2)
|
7
|
|
37
|
|
|
|
Adjusted
EBITDA |
82,658
|
|
46,908
|
|
$
|
129,566
|
|
Reconciliation
of total reportable segments’ adjusted EBITDA to income before income taxes
|
|
|
|
|
|
|
Amortization
|
|
|
|
|
(27,356)
|
|
|
Depreciation
|
|
|
|
|
(12,898)
|
|
|
Interest
expense |
|
|
|
|
(45,892)
|
|
|
Interest
income |
|
|
|
|
27,727
|
|
|
Corporate
costs, net of eliminations |
|
|
|
|
(64,257)
|
|
|
Other
adjustments: |
|
|
|
|
|
|
Acquisition
contingent consideration |
|
|
|
|
3,286
|
|
|
Acquisition
integration costs |
|
|
|
|
(12,695)
|
|
|
Stock-based
compensation |
|
|
|
|
(34,588)
|
|
|
Merger
and acquisition related expenses |
|
|
|
|
(4,392)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition
related tax adjustment |
|
|
|
|
(1,293)
|
|
|
Tax
Receivable Agreement liability adjustment |
|
|
|
|
668,886
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring
costs (3)
|
|
|
|
|
(6,567)
|
|
|
Other
|
|
|
|
|
(1,791)
|
|
|
Income
before income taxes
|
|
|
|
|
617,736
|
|
|
Income
tax expense
|
|
|
|
|
(756,111)
|
|
|
Net
loss |
|
|
|
|
$
|
(138,375)
|
|
___________________
(1)Expenses
are adjusted to remove the impact of certain items that management believes do not directly reflect our core
operations, and, therefore, are not included in measuring segment performance.
(2)Other
segment items for each reportable segment include realized and unrealized loss (gain) on foreign exchange
transactions.
(3)For
the years ended December 31, 2024 and 2023, stock-based compensation benefit of $1.2 million and
$0.1 million, respectively, related to forfeited stock awards in connection with the Cost Realignment
Plan is included on the stock-based compensation line item.
There
was no intersegment revenue during the year ended December 31, 2024. During the year ended December 31,
2023, intersegment revenue was immaterial between the Nucleic Acid Production and Biologics Safety Testing
segments. The intersegment sales and the related gross margin on inventory recorded at the end of the period
are eliminated for consolidation purposes. Internal selling prices for intersegment sales are consistent
with the segment’s normal retail price offered to external parties. There was no commission expense
recognized for intersegment sales for the years ended December 31, 2024 and 2023.
Adjusted
EBITDA (Non-GAAP Financial Measure)
A
reconciliation of net loss to Adjusted EBITDA, which is a non-GAAP measure, is set forth below (in
thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
Year
Ended December 31, |
|
2024
|
|
2023
|
|
Net
loss
|
$
|
(259,622)
|
|
|
$
|
(138,375)
|
|
|
Add:
|
|
|
|
|
Amortization
|
27,531
|
|
|
27,356
|
|
|
Depreciation
|
20,852
|
|
|
12,898
|
|
|
Interest
expense |
47,700
|
|
|
45,892
|
|
|
Interest
income |
(27,403)
|
|
|
(27,727)
|
|
|
Income
tax (benefit) expense
|
(1,860)
|
|
|
756,111
|
|
|
EBITDA
|
(192,802)
|
|
|
676,155
|
|
|
Acquisition
contingent consideration (1)
|
(2,003)
|
|
|
(3,286)
|
|
|
Acquisition
integration costs (2)
|
5,559
|
|
|
12,695
|
|
|
Stock-based
compensation (3)
|
49,415
|
|
|
34,588
|
|
|
Merger
and acquisition related expenses (4)
|
1,728
|
|
|
4,392
|
|
|
|
|
|
|
Loss
on extinguishment of debt (5)
|
3,187
|
|
|
—
|
|
|
Acquisition
related tax adjustment (6)
|
2,306
|
|
|
1,293
|
|
|
Tax
Receivable Agreement liability adjustment (7)
|
40
|
|
|
(668,886)
|
|
|
|
|
|
|
Goodwill
impairment (8)
|
166,151
|
|
|
—
|
|
|
Restructuring
costs (9)
|
11
|
|
|
6,567
|
|
|
Other
(10)
|
2,330
|
|
|
1,791
|
|
|
Adjusted
EBITDA |
$
|
35,922
|
|
|
$
|
65,309
|
|
____________________
(1)Refers
to the change in the estimated fair value of contingent consideration related to completed
acquisitions.
(2)Refers
to incremental costs incurred to execute and integrate completed acquisitions, including retention payments
related to integration that were negotiated specifically at the time of, the Company’s acquisition of
MyChem, LLC (“MyChem”) and Alphazyme, LLC (“Alphazyme”), which were completed in
January 2022 and January 2023, respectively. These retention payments arise from the Company’s
agreements executed in connection with its acquisitions of MyChem and Alphazyme and provide incremental
financial incentives, over and above recurring compensation, to ensure the employees of these companies
remain present and participate in integration of the acquired businesses during the integration and
knowledge transfer periods. The Company agreed to pay certain employees of Alphazyme retention payments
totaling $9.3 million as of various dates but primarily through December 31, 2025, as long as these
individuals continue to be employed by the Company. The Company agreed to pay the sellers of MyChem
retention payments totaling $20.0 million as of the second anniversary of the closing of the acquisition
date as long as two senior employees (who were also the sellers of MyChem) continue to be employed by
TriLink. The Company considers the payment of these retention payments as probable and is recognizing
compensation expense related to these payments in the post-acquisition period ratably over the service
period. Retention payment expenses were $5.2 million (MyChem $1.8 million; Alphazyme
$3.4 million) and $11.9 million (MyChem $9.3 million; Alphazyme $2.6 million) for the
years ended December 31, 2024 and 2023, respectively. Retention expenses for MyChem concluded in the
first quarter of 2024, and following the payments in the first quarter of 2024, there are no further
retention expenses payable for MyChem. The remaining retention accrual for Alphazyme is $3.4 million,
expected to be accrued ratably each quarter through December 31, 2025, with payments expected to be made in
the first quarter of 2026. There are no further cash-based retention payments planned, other than those
disclosed above, for acquisitions completed as of December 31, 2024.
(3)Refers
to non-cash expense associated with stock-based compensation.
(4)Refers
to diligence, legal, accounting, tax and consulting fees incurred associated with acquisitions that were
pursued but not consummated.
(5)Refers
to the non-cash loss incurred on partial extinguishment of debt primarily associated with the voluntary
prepayment on the Term Loan.
(6)Refers
to non-cash expense associated with adjustments to the carrying value of the indemnification asset recorded
in connection with the acquisition of MyChem.
(7)For
the year ended December 31, 2024, refers to the adjustment of the Tax Receivable Agreement liability
primarily due to changes in our estimated state apportionment and the corresponding change of our estimated
state tax rate. For the year ended December 31, 2023, refers to the adjustment of our Tax Receivable
Agreement liability primarily due to remeasuring the non-current portion of the liability to zero as we no
longer consider the payments under the agreement to be probable.
(8)Refers
to the goodwill impairment recorded for our Nucleic Acid Production segment.
(9)Refers
to restructuring costs associated with the Cost Realignment Plan, which was implemented in November 2023.
For the years ended December 31, 2024 and 2023, stock-based compensation benefit of $1.2 million
and $0.1 million, respectively, related to forfeited equity awards in connection with the restructuring
is included in the stock-based compensation line item.
(10)For
the year ended December 31, 2024, refers to the loss on abandoned projects, severance payments,
inventory step-up charges and certain other adjustments in connection with the acquisition of Alphazyme, and
other non-recurring costs. For the year ended December 31, 2023, refers to severance payments, legal
settlement amounts, inventory step-up charges in connection with the acquisition of Alphazyme, certain
working capital and other adjustments related to the acquisition of MyChem, and other non-recurring
costs.
Operating
Expenses
Operating
expenses include the following for the periods presented (in thousands, except percentages):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year
Ended December 31, |
|
Percentage
of Revenue |
|
2024
|
|
2023
|
|
Year-Over-Year
Change |
|
2024
|
|
2023
|
|
Cost
of revenue |
$
|
150,876
|
|
|
$
|
148,743
|
|
|
1.4
|
%
|
|
58.2
|
%
|
|
51.5
|
%
|
|
Selling,
general and administrative |
161,771
|
|
|
151,390
|
|
|
6.9
|
%
|
|
62.5
|
%
|
|
52.4
|
%
|
|
Research
and development |
19,221
|
|
|
17,280
|
|
|
11.2
|
%
|
|
7.4
|
%
|
|
6.0
|
%
|
|
Change
in estimated fair value of contingent consideration |
(2,003)
|
|
|
(3,286)
|
|
|
(39.0)
|
%
|
|
(0.8)
|
%
|
|
(1.1)
|
%
|
|
Goodwill
impairment |
166,151
|
|
|
—
|
|
|
*
|
|
64.1
|
%
|
|
—
|
%
|
|
Restructuring
|
(1,214)
|
|
|
6,466
|
|
|
*
|
|
(0.5)
|
%
|
|
2.2
|
%
|
|
Total
operating expenses |
$
|
494,802
|
|
|
$
|
320,593
|
|
|
54.3
|
%
|
|
190.9
|
%
|
|
111.0
|
%
|
____________________
*Not
meaningful
Cost
of Revenue
Cost
of revenue increased by $2.2 million from $148.7 million for the year ended December 31, 2023 to $150.9
million for the year ended December 31, 2024, or 1.4%. The increase in cost of revenue was primarily
driven by increases of $3.0 million in facility costs, $2.3 million in stock-based compensation, $1.8
million in supplies and materials, $1.6 million in depreciation expense driven by new facilities and an
increase in assets placed in service during the current year, and $0.7 million related to the loss on
abandoned projects. These increases were partially offset by a decrease of $7.7 million due to lower
personnel costs driven by the Cost Realignment Plan and a decrease in retention payment accruals associated
with the acquisition of MyChem, which was completed and paid for during the first quarter of 2024.
Gross
profit decreased by $31.9 million from $140.2 million for the year ended December 31, 2023 to $108.3
million for the year ended December 31, 2024. The decrease in gross profit margin as a percentage of
sales was primarily attributable to higher facility costs, stock-based compensation expense, supplies and
materials, and depreciation expense as a percentage of sales.
Selling,
General and Administrative
Selling,
general and administrative expenses increased by $10.4 million from $151.4 million for the year ended
December 31, 2023 to $161.8 million for the year ended December 31, 2024, or 6.9%. The increase
was primarily driven by increases of $11.4 million in stock-based compensation expense and $5.9 million in
depreciation expense driven by new facilities and an increase in assets placed in service during the current
year. These were partially offset by a decrease of $6.4 million in professional service fees primarily
driven by lower expenses related to merger and acquisitions and contract services, and a decrease of $1.1
million in marketing expenses.
Research
and Development
Research
and development expenses increased by $1.9 million from $17.3 million for the year ended December 31,
2023 to $19.2 million for the year ended December 31, 2024, or 11.2%. The increase in expenses compared
to the prior year was primarily driven by increases of $2.3 million in stock-based compensation expense,
$1.3 million in professional service fees for contract services related to research and development studies,
$1.0 million in supplies and materials, and $0.5 million in depreciation expense. These were partially
offset by a decrease of $3.1 million in personnel expenses primarily relating to a decrease in retention
payment accruals associated with the acquisition of MyChem, which was completed and paid for during the
first quarter of 2024.
Change
in Estimated Fair Value of Contingent Consideration
The
decrease in change in estimated fair value of contingent consideration of $2.0 million and $3.3
million
for
the years ended December 31, 2024 and 2023, respectively, were due to decreases in estimated fair value
of the liability for the contingent payments associated with the acquisition of Alphazyme.
Goodwill
Impairment
In
connection with preparing our financial statements for the third quarter of 2024, we tested our reporting
units for potential goodwill impairment in response to impairment indicators identified during our
forecasting process and the sustained decline in our stock price. As of December 31, 2024, we revised
our long-term forecast to reflect lower projected near-term revenues due to lower demand in research and
discovery products within our Nucleic Acid Production business. As such, we performed a quantitative
goodwill impairment test on each of our four reporting units and as a result, we concluded that the TriLink
reporting unit, which is contained in the Nucleic Acid Production segment, had a carrying value that
exceeded its estimated fair value. As a result, we recorded goodwill impairment of $154.2 million during the
year ended December 31, 2024, which was the entire goodwill balance at the TriLink reporting unit.
In
connection with preparing our financial statements for the year ended December 31, 2024, we tested our
remaining reporting units for potential goodwill impairment in response to impairment indicators identified
during our forecasting process. These indicators included a downward revision of our long-term forecast to
reflect lower projected near-term revenues due to lower demand in enzyme products within our Nucleic Acid
Production business, as well as the sustained decline in stock price. As such, we performed a quantitative
goodwill impairment test on each of our reporting units with goodwill as of December 31, 2024, and as a
result, we concluded that the Alphazyme reporting unit, which is contained in the Nucleic Acid Production
segment, had a carrying value that exceeded its estimated fair value. As a result, we recorded goodwill
impairment of $11.9 million during the year ended December 31, 2024.
See
Note 4 to our consolidated financial statements for additional information.
Restructuring
Restructuring
costs (benefit) for the years ended December 31, 2024 and 2023 relate to the Cost Realignment Plan,
which was implemented in November 2023. For the year ended December 31, 2024, restructuring costs
(benefit) primarily consists of the stock-based compensation benefit recognized for the forfeiture of stock
awards upon the termination of certain impacted employees. For the year ended December 31, 2023,
restructuring costs include severance and other employee-related costs of $4.3 million, offset by a $0.1
million stock-based compensation benefit, facility and other exit costs of $2.0 million, and professional
fees and other associated costs of $0.3 million.
Other
Income (Expense)
Other
income (expense) includes the following for the periods presented (in thousands, except percentages):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year
Ended December 31, |
|
Percentage
of Revenue |
|
2024
|
|
2023
|
|
Year-Over-Year
Change |
|
2024
|
|
2023
|
|
Interest
expense |
$
|
(47,700)
|
|
|
$
|
(45,892)
|
|
|
3.9
|
%
|
|
(18.4)
|
%
|
|
(15.9)
|
%
|
|
Interest
income |
27,403
|
|
|
27,727
|
|
|
(1.2)
|
%
|
|
10.5
|
%
|
|
9.6
|
%
|
|
Loss
on extinguishment of debt |
(3,187)
|
|
|
—
|
|
|
*
|
|
(1.2)
|
%
|
|
—
|
%
|
|
Change
in payable to related parties pursuant to the Tax Receivable Agreement |
(40)
|
|
|
668,886
|
|
|
*
|
|
0.0
|
%
|
|
231.5
|
%
|
|
Other
expense
|
(2,341)
|
|
|
(1,337)
|
|
|
75.1
|
%
|
|
(0.9)
|
%
|
|
(0.5)
|
%
|
|
Total
other (expense) income, net
|
$
|
(25,865)
|
|
|
$
|
649,384
|
|
|
*
|
|
(10.0)
|
%
|
|
224.7
|
%
|
____________________
*Not
meaningful
Other
income was $649.4 million for the year ended December 31, 2023 compared to Other expense of $25.9
million for the year ended December 31, 2024, representing a change of $675.2 million. The overall
change in Other (expense) income was primarily attributable to the prior year $668.9 million gain related to
the payable to related parties pursuant to the Tax Receivable Agreement as we concluded that it was not
probable that we will be able to realize the remaining tax benefits based on estimates of future taxable
income. The change is also driven by a loss on extinguishment of debt of $3.2 million primarily
driven
by the write-off of pre-existing deferred financing costs as a result of the voluntary prepayment on the
Term Loan, a $1.8 million increase in interest expense, and a $1.0 million increase in Other expense
relating to the indemnification asset recorded in connection with the acquisition of MyChem.
Relationship
with GTCR, LLC (“GTCR”)
As
of December 31, 2024, investment entities affiliated with GTCR collectively controlled approximately
52% of the voting power of our common stock, which enables GTCR to control the vote of all matters submitted
to a vote of our shareholders and to control the election of members of our Board of Directors and all other
corporate decisions.
During
the years ended December 31, 2024 and 2023, we made cash distributions of $0.5 million and $9.6
million, respectively, for tax liabilities to MLSH 1, which is controlled by investment entities affiliates
with GTCR and is the only holder of LLC Units other than us and our wholly owned subsidiaries.
We
are also a party to a Tax Receivable Agreement, or TRA, with MLSH 1, which is primarily owned by GTCR, and
MLSH 2 (see Note 14 to our consolidated financial statements). The TRA provides for the payment by us to
MLSH 1 and MLSH 2, collectively, of 85% of the amount of tax benefits, if any, that we actually realize, or
in some circumstances are deemed to realize, from exchanges of LLC Units (together with the corresponding
shares of Class B common stock) for Class A common stock, as a result of (i) certain increases in the tax
basis of assets of Topco LLC and its subsidiaries resulting from purchases or exchanges of LLC Units, (ii)
certain tax attributes of the entities acquired from MLSH 1 and MLSH 2 in connection with the Organizational
Transactions, Topco LLC and subsidiaries of Topco LLC that existed prior to the IPO, and (iii) certain other
tax benefits related to our entering into the TRA, including tax benefits attributable to payments that we
make under the TRA (collectively, the “Tax Attributes”). Payment obligations under the TRA are
not conditioned upon any Topco LLC unitholders maintaining a continued ownership interest in us or Topco
LLC, and the rights of MLSH 1 and MLSH 2 under the TRA are assignable. There is no stated term for the TRA,
and the TRA will continue until all tax benefits have been utilized or expired unless we exercise our right
to terminate the TRA for an agreed-upon amount.
We
recognize the amount of TRA payments expected to be paid within the next 12 months and classify this amount
as current. This determination was based on our estimate of taxable income for the year ended
December 31, 2024. As of December 31, 2024, we did not have a current liability under the TRA. As
of December 31, 2023, our current liability under the TRA was $7.1 million.
As
of December 31, 2023, the Company has derecognized the remaining non-current liability under the TRA
after concluding it was not probable that the Company will be able to realize the remaining tax benefits
based on estimates of future taxable income. There have been no changes to our position as of
December 31, 2024. The estimation of liability under the TRA is by its nature imprecise and subject to
significant assumptions regarding the amount, character, and timing of the taxable income in the future. If
the valuation allowance recorded against the deferred tax assets applicable to the tax attributes referenced
above is released in a future period, the remaining TRA liability may be considered probable at that time
and recorded on the consolidated balance sheet and within earnings.
We
made payments of $7.3 million to MLSH 1 and MLSH 2 pursuant to the TRA during the year ended
December 31, 2024, of which $0.2 million is related to interest. This determination was based on our
taxable income for the year ended December 31, 2023. We made payments of $42.6 million to MLSH 1 and
MLSH 2 pursuant to the TRA during the year ended December 31, 2023, of which $0.4 million is related to
interest. This determination was based on our taxable income for the year ended December 31,
2022.
Liquidity
and Capital Resources
Overview
We
have financed our operations primarily from cash flow from operations, borrowings under long-term debt
agreements and, to a lesser extent, the sale of our Class A common stock.
As
of December 31, 2024, we had cash and cash equivalents of $322.4 million and retained earnings of
$140.9 million. We had positive cash flow from operations of $7.5 million.
We
have historically relied on revenue derived from product and services sales, and proceeds from equity and
debt financings to fund our operations to date.
Our
principal uses of cash have been to fund operations, acquisitions and capital expenditures, as well as make
tax distributions to MLSH 1, make TRA payments to MLSH 1 and MLSH 2 and make interest payments and mandatory
principal payments on our long-term debt.
We
plan to utilize our existing cash on hand, together with cash generated from operations, primarily to fund
our commercial and marketing activities associated with our products and services, continued research and
development initiatives, and ongoing investments into our manufacturing facilities to create efficiencies
and build capacity. We believe our cash on hand, cash generated from operations and continued access to our
credit facilities, will be sufficient to satisfy our cash requirements over the next 12 months and
beyond.
As
a result of our ownership of LLC Units in Topco LLC, the Company is subject to U.S. federal, state and local
income taxes with respect to its allocable share of any taxable income of Topco LLC and is taxed at the
prevailing corporate tax rates. In addition to tax expenses, we also will incur expenses related to our
operations and we may be required to make payments under the TRA with MLSH 1 and MLSH 2. Due to the
uncertainty of various factors, we cannot precisely quantify the likely tax benefits we will realize as a
result of LLC Unit exchanges and the resulting amounts we are likely to pay out to LLC Unitholders of Topco
LLC pursuant to the TRA. The foregoing numbers are estimates and the actual payments could differ
materially. We expect to fund these payments using cash on hand and cash generated from operations. We do
not expect any probable future payments under the TRA relating to the purchase by the Company of LLC Units
from MLSH 1 and the corresponding tax attributes. This determination is based on our taxable income for the
year ended December 31, 2024.
During
the years ended December 31, 2024 and 2023, we determined that making a payment under the non-current
portion of the TRA was not probable under Accounting
Standards Codification 450 - Contingencies
since a valuation allowance has been recorded against our deferred tax assets and we do not believe we will
generate sufficient future taxable income to utilize related tax benefits and result in a payment under the
TRA. If we had determined that making a payment under the TRA and generating sufficient future taxable
income was probable, we would have also recorded a liability pursuant to the TRA, net of current portion, of
approximately $683.8 million in the consolidated balance sheet. Future payments in respect of subsequent
exchanges or financings and tax attributes relating to the purchase by the Company of LLC Units from MLSH 1
would be in addition to this amount and may be substantial. The foregoing numbers are estimates and the
actual payments could differ materially. We expect to fund these payments using cash on hand and cash
generated from operations.
As
a result of a change of control, material breach, or our election to terminate the TRA early, (1) we could
be required to make cash payments to MLSH 1 and MLSH 2 that are greater than the specified percentage of the
actual benefits we ultimately realize in respect of the tax benefits that are subject to the TRA, and (2) we
will be required to make an immediate cash payment equal to the present value of the anticipated future tax
benefits that are the subject of the TRA, which payment may be made significantly in advance of the actual
realization, if any, of such future tax benefits. In these situations, our obligations under the TRA could
have a material adverse effect on our liquidity and could have the effect of delaying, deferring or
preventing certain mergers, asset sales, other forms of business combinations, or other changes of control.
There can be no assurance that we will be able to finance our obligations under the TRA.
In
addition to payments to be made under the TRA, we are also required to make tax distributions to MLSH 1
pursuant to the LLC Operating Agreement for the portion of income passing through to them from Topco LLC.
During the years ended December 31, 2024 and 2023, we made cash distributions of $0.5 million and $9.6
million, respectively, for tax liabilities to MLSH 1 under this agreement.
Credit
Agreement
Maravai
Intermediate Holdings, LLC (“Intermediate”), a wholly-owned subsidiary of Topco LLC, along with
certain of its subsidiaries (together with Intermediate, the “Borrowers”) are parties to a
credit agreement (as amended, the “Credit Agreement”), which provides for a $600.0 million term
loan facility, maturing October 2027 (the “Term Loan”) and a $167.0 million revolving credit
facility, maturing October 2029 (subject to springing maturity provisions based on the maturity of the Term
Loan) (the “Revolving Credit Facility”). Borrowings under the Credit Agreement bear interest at
a variable rate based on Term Secured Overnight Financing Rate (“SOFR”) plus an applicable
interest rate margin.
As
of December 31, 2024, the interest rate on the Term Loan was 7.62% per annum. There were no outstanding
borrowings under the Revolving Credit Facility as of December 31, 2024.
The
Revolving Credit Facility also provides availability for the issuance of letters of credit up to an
aggregate limit of $20.0 million. As of December 31, 2024, the Company had a $0.5 million outstanding
letter of credit as security for a lease agreement, which reduced the availability for the future issuance
of letters of credit under the Revolving Credit Facility to $19.5 million.
Borrowings
under the Credit Agreement are unconditionally guaranteed by Topco LLC, together with the existing and
future material domestic subsidiaries of Topco LLC (subject to certain exceptions), as specified in the
respective guaranty agreements. Borrowings under the Credit Agreement are also secured by a first-priority
lien and security interest in substantially all of the assets (subject to certain exceptions) of existing
and future material domestic subsidiaries of Topco LLC that are loan parties.
The
Term Loan requires mandatory quarterly principal payments of $1.4 million, which began in March 2022,
and all remaining outstanding principal is due on maturity in October 2027. The Term Loan includes
prepayment provisions that allow the Company, at our option, to repay all or a portion of the outstanding
principal at any time. In December 2024, the Company voluntarily pre-paid, using cash on hand, $228.0
million of aggregate principal amount of the Term Loan. There were no prepayment penalties associated with
this prepayment of principal. As a result of the prepayment, the Company recorded a loss on partial
extinguishment of debt of $3.0 million related to the write-off of pre-existing deferred financing costs.
The
Revolving Credit Facility allows the Company to repay and borrow from time to time until its maturity date,
at which time all amounts borrowed must be repaid. Subject to certain exceptions and limitations, we are
required to repay borrowings under the Term Loan and Revolving Credit Facility with the proceeds of certain
occurrences, such as the incurrence of debt, certain equity contributions and certain asset sales or
dispositions.
Accrued
interest under the Credit Agreement is payable by us (a) quarterly in arrears with respect to base rate
loans, (b) at the end of each interest rate period (or at each three-month interval in the case of
loans with interest periods greater than three months) with respect to Term SOFR rate loans, (c) on the
date of any repayment or prepayment and (d) at maturity (whether by acceleration or otherwise). An
annual commitment fee is applied to the daily unutilized amount under the Revolving Credit Facility at
0.375% per annum, with one stepdown to 0.25% per annum based on Intermediate’s first lien net leverage
ratio calculation.
The
Credit Agreement requires that we make mandatory prepayments on the Term Loan principal upon certain excess
cash flow, subject to certain step-downs based on the Company’s first lien net leverage ratio. The
excess cash flow shall be reduced to 25% or 0% of the calculated excess cash flow if the Company’s
first lien net leverage ratio was equal to or less than 4.75:1.00 or 4.25:1.00, respectively, however, no
prepayment shall be required to the extent excess cash flow calculated for the respective period is equal to
or less than $10.0 million. As of December 31, 2024, the Company’s first lien net leverage ratio
was less than 4.25:1.00. Thus, a mandatory prepayment on the Term Loan out of our excess cash flow was not
required.
The
Credit Agreement contains certain covenants, including, among other things, covenants limiting our ability
to incur or prepay certain indebtedness, pay dividends or distributions, dispose of assets, engage in
mergers and consolidations, make acquisitions or other investments and make changes to the nature of the
business. Additionally, the Credit Agreement requires us to maintain a certain net leverage ratio if the
outstanding debt balance on the Revolving Credit Facility exceeds 35.0% of the aggregate amount of available
credit of $167.0 million, or $58.5 million. The Company was in compliance with these covenants as of
December 31, 2024.
Tax
Receivable Agreement
We
are a party to the TRA with MLSH 1 and MLSH 2. The TRA provides for the payment by us to MLSH 1 and MLSH 2,
collectively, of 85% of the amount of certain tax benefits, if any, that we actually realize, or in some
circumstances are deemed to realize, as a result of the Organizational Transactions, IPO and any subsequent
purchases or exchanges of LLC Units of Topco LLC.
We
recognize the amount of TRA payments expected to be paid within the next 12 months and classify this amount
as current. This determination was based on our estimate of taxable income for the year ended
December 31, 2024. As of December 31, 2024, we did not have a current liability under the TRA. We
may record additional liabilities under the TRA when LLC Units are exchanged in the future and as our
estimates of the future utilization of the Tax Attributes, net operating losses and other tax benefits
change. We expect to make payments under the TRA, to the extent they are required, within 125 days after the
extended due date of our U.S. federal income tax return for such taxable year. Interest on such payments
will begin to accrue from the due date (without extensions) of such tax return at a rate of LIBOR (or, if
LIBOR ceases to be published, a Replacement Rate) plus 100 basis points. Generally, any late payments will
continue to accrue interest at LIBOR (or a Replacement Rate, as applicable) plus 500 basis points until such
payments are made. Given the cessation of LIBOR, we transitioned to SOFR as the applicable Replacement Rate
as allowable under the TRA.
The
payment obligations under the TRA are obligations of Maravai LifeSciences Holdings, Inc. and not of Topco
LLC. Although the actual timing and amount of any payments that may be made under the TRA will vary, the
aggregate payments that we will be required to make to MLSH 1 and MLSH 2 may be substantial. Any payments
made by us under the TRA will generally reduce the amount of overall cash flow that might have otherwise
been available to us or to Topco LLC and, to the extent that we are unable to make payments under the TRA
for any reason, the unpaid amounts will be deferred and will accrue interest until paid by us. We anticipate
funding ordinary course payments under the TRA from cash flow from operations of Topco LLC and its
subsidiaries, available cash and/or available borrowings under the Credit Agreement.
During
the year ended December 31, 2023, we determined that making a payment under the non-current portion of the
TRA was not probable under Accounting
Standards Codification 450 - Contingencies
as a result of a valuation allowance having been recorded against our deferred tax assets, and therefore,
that it is more likely than not that we will not generate sufficient
future
taxable income to utilize related tax benefits that would result in a payment under the TRA. There have been
no changes to our position as of December 31, 2024. If we had determined that making a payment under
the TRA and generating sufficient future taxable income was probable, we would have also recorded a
liability pursuant to the TRA, net of current portion, of approximately $683.8 million in the consolidated
balance sheet.
Cash
Flows
The
following table summarizes our cash flows for the periods presented (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
Year
Ended December 31, |
|
2024
|
|
2023
|
|
Net
cash provided by (used in): |
|
|
|
|
Operating
activities |
$
|
7,465
|
|
|
$
|
126,224
|
|
|
Investing
activities |
(24,316)
|
|
|
(122,310)
|
|
|
Financing
activities |
(235,712)
|
|
|
(61,090)
|
|
|
|
|
|
|
Net
decrease in cash and cash equivalents
|
$
|
(252,563)
|
|
|
$
|
(57,176)
|
|
Operating
Activities
Net
cash provided by operating activities for the year ended December 31, 2024 was $7.5 million, which was
primarily attributable to non-cash depreciation and amortization of $48.4 million, non-cash amortization of
operating lease right-of-use assets of $8.5 million, non-cash amortization of deferred financing costs of
$2.9 million, non-cash stock-based compensation of $49.4 million, non-cash loss on extinguishment of debt of
$3.2 million, non-cash goodwill impairment of $166.2 million, and non-cash acquisition related tax
adjustment of $2.3 million. These were partially offset by a net loss of $259.6 million, net cash outflow
from the change in our operating assets and liabilities of $12.6 million, and non-cash gain on the change in
estimated fair value of contingent consideration of $2.0 million.
Investing
Activities
Net
cash used in investing activities for the year ended December 31, 2024 was $24.3 million, which was
primarily comprised of cash outflows of $29.7 million for property and equipment purchases, offset by
proceeds from government assistance allocated to property and equipment of $7.1 million, and cash outflows
of $1.5 million for the purchase of technology.
Financing
Activities
Net
cash used in financing activities for the year ended December 31, 2024 was $235.7 million, which was
primarily attributable to $234.4 million of principal repayments of long-term debt, which included the
voluntary principal prepayment on the Term Loan. This was also driven by $7.1 million of payments to MLSH 1
and MLSH 2 pursuant to the TRA, $2.1 million of tax payments for shares withheld under employee equity
plans, net of proceeds from the issuance of shares of our Class A common stock, $1.2 million of payments for
financing costs incurred for long-term debt, $0.6 million of payments of finance lease liabilities, and $0.5
million of cash distributions for tax liabilities to MLSH 1, as required pursuant to the terms of the LLC
Operating Agreement. These were partially offset by proceeds from interest rate cap agreement of $9.3
million.
Capital
Expenditures
We
define capital expenditures as: (i) purchases of property and equipment which are included in cash flows
from investing activities, offset by government funding received; and (ii) construction costs determined to
be lessor improvements recorded as prepaid lease payments and right-of-use assets, offset by government
funding received. Capital expenditures for the year ended December 31, 2024 totaled $22.5 million,
which is net of government funding of $7.1 million. Capital expenditures for the year ending
December 31, 2025 are projected to be in the range of $15.0 million to $20.0 million, of which $10.0
million relates to the expansion of our enzyme manufacturing capabilities.
Contractual
Obligations and Commitments
The
following table summarizes our contractual obligations and commitments as of December 31, 2024 (in
thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payments
due by period |
|
Total
|
|
1
year |
|
2
- 3 years |
|
4
- 5 years |
|
5+
years |
|
Operating
leases
(1)
|
$
|
56,959
|
|
|
$
|
10,599
|
|
|
$
|
19,244
|
|
|
$
|
18,363
|
|
|
$
|
8,753
|
|
|
Finance
leases (2)
|
31,191
|
|
|
3,427
|
|
|
7,166
|
|
|
7,602
|
|
|
12,996
|
|
|
Debt
obligations (3)
|
299,680
|
|
|
5,440
|
|
|
294,240
|
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
Unconditional
purchase obligations (4)
|
989
|
|
|
619
|
|
|
370
|
|
|
—
|
|
|
—
|
|
|
Total
|
$
|
388,819
|
|
|
$
|
20,085
|
|
|
$
|
321,020
|
|
|
$
|
25,965
|
|
|
$
|
21,749
|
|
_______________
(1)Represents
operating lease payment obligations, excluding any renewal options we are reasonably certain to execute and
have recognized as lease liabilities. See Note 8 to our consolidated financial statements for additional
information.
(2)Represents
finance lease payment obligations, excluding any renewal options we are reasonably certain to execute and
have recognized as lease liabilities. See Note 8 to our consolidated financial statements for additional
information.
(3)Represents
long-term debt principal maturities, excluding interest and unamortized debt issuance costs. See Note 10 to
our consolidated financial statements for additional information.
(4)Represents
firm purchase commitments to our suppliers. See Note 9 to our consolidated financial statements for
additional information.
Cash
distributions for owner tax liabilities are required under the terms of the Topco LLC Agreement. As of
December 31, 2024, we have made tax distributions equal to the estimated obligation due for 2024. See
Note 14 to our consolidated financial statements for additional information regarding tax
distributions.
Commencing
with the fiscal year ended December 31, 2021, and each fiscal year thereafter, the Credit Agreement requires
that we make mandatory prepayments of the Term Loan principal upon certain excess cash flow, subject to
certain step-downs based on our first lien net leverage ratio. The mandatory prepayment shall be reduced to
25% or 0% of the calculated excess cash flow if the first lien net leverage ratio was equal to or less than
4.75:1.00 or 4.25:1.00, respectively; however, no prepayment shall be required to the extent excess cash
flow calculated for the respective period is equal to or less than $10.0 million. As of December 31,
2024, our first lien net leverage ratio was less than 4.25:1.00.
In
connection with our acquisition of Alphazyme, which was completed in January 2023, we were initially
required to make contingent payments of up to $75.0 million to the sellers of Alphazyme dependent upon
Alphazyme meeting or exceeding defined revenue targets during each of the fiscal years 2023 through 2025.
For the first and second performance periods which ended on December 31, 2023 and 2024, respectively, it was
determined that the defined revenue targets were not achieved. Consequently, no payments for contingent
consideration were made to the sellers of Alphazyme in 2024 and 2025, respectively. As of December 31,
2024, we may be required to make contingent payments to the sellers of Alphazyme of up to $25.0 million for
the remaining performance period. We may also be required to make certain retention payments of $9.3
million, of which $6.6 million is accrued as of December 31, 2024, to its sellers and certain employees
as of various dates but primarily through December 31, 2025 as long as these individuals continue to be
employed by the Company. We cannot, at this time, determine when or if the related targets will be achieved
or whether the events triggering the commencement of payment obligations will occur. Therefore, such
payments were not included in the table above. See Notes 2 and 5 to our consolidated financial statements
for additional details.
Critical
Accounting Estimates
We
have prepared our consolidated financial statements in accordance with GAAP. Our preparation of these
consolidated financial statements requires us to make estimates and assumptions that affect the reported
amounts of assets, liabilities, revenue, expenses and related disclosures in the consolidated financial
statements. Our estimates are based on historical experience and on various other assumptions that we
believe are reasonable under the circumstances, the results of which form the basis for making judgments
about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual
results could differ from these estimates under different assumptions or conditions and any such difference
may be material.
Our
significant accounting policies are described in more detail in Note 1 to our consolidated financial
statements. We believe the following discussion addresses our most critical accounting estimates used in the
preparation of our consolidated financial statements, which require subjective and complex judgments.
Goodwill
We
evaluate goodwill at the reporting unit level on an annual basis and on an interim basis if events and
circumstances indicate it is more likely than not that the fair value of a reporting unit is less than its
carrying value. Such indicators could include, but are not limited to, current economic and market
conditions, including a decline in market capitalization, a significant adverse change in legal factors,
business climate, operational performance of the business or loss of key personnel. We perform our annual
impairment test in the fourth quarter.
We
first assess qualitative factors to determine whether it is more likely than not that the fair value of a
reporting unit is less than its carrying value, including goodwill. If management concludes that it is more
likely than not that the fair value of a reporting unit is less than its carrying value, management performs
a quantitative goodwill impairment test. If the carrying value of a reporting unit exceeds its estimated
fair value, an impairment loss will be recognized for the amount by which the carrying amount exceeds the
reporting unit’s fair value.
In
connection with preparing our financial statements for the third quarter of 2024, we tested our reporting
units for potential goodwill impairment in response to impairment indicators identified during our
forecasting process. We revised our long-term forecast to reflect lower projected near-term revenues due to
lower demand in research and discovery products within our Nucleic Acid Production business. This revision
also considered the slower than expected transition to new mRNA clinical trials as customers prioritize
existing programs and more conservatively invest in new programs as the results of continued macroeconomic
pressures. As such, we performed a quantitative goodwill impairment test and compared our reporting
units’ fair values to their respective carrying values to determine whether goodwill was impaired. We
performed the impairment test using a combination of the income and the market approach to evaluate whether
the fair value of each reporting unit was less than its carrying value. The income approach utilizes a
discounted cash flow model, incorporating both internal estimates and market-based data, while the market
approach utilizes comparable company information. The significant assumptions in the discounted cash flow
models vary amongst, and are specific to, each reporting unit and include, but are not limited to, discount
rates, projected revenue, revenue growth rates (including terminal growth rates) and EBITDA margins.
Discount rates were determined using a weighted average cost of capital specific to each reporting unit and
other market and industry data. These assumptions were formulated with consideration of prevailing market
conditions and anticipated developments, including new product and service initiatives, competitive
dynamics, and broader economic factors. The result of the quantitative analysis indicated that the fair
value of the TriLink reporting unit did not exceed its carrying value and consequently resulted in a $154.2
million
impairment
charge, which was the entire goodwill balance at the TriLink reporting unit.
In
connection with preparing our financial statements for the year ended December 31, 2024, we tested our
reporting units for potential goodwill impairment in response to impairment indicators identified during our
forecasting process and the sustained decline in our stock price. As of December 31, 2024, we revised
our long-term forecast to reflect lower projected near-term revenues due to lower demand in enzyme products
within our Nucleic Acid Production business. As a result, the Company conducted a quantitative goodwill
impairment test for the Alphazyme reporting unit using the same methodology described above for TriLink,
including the use of the following significant assumptions: discount rates, projected revenue, revenue
growth rates (including terminal growth rates) and EBITDA margins. The selected discount rate was 28.5%,
which was determined using a weighted average cost of capital specific to the Alphazyme reporting unit and
other market and industry data. These assumptions were developed in light of current market conditions and
future expectations which include, but were not limited to, new product and service developments, the impact
of competition and future economic conditions. The result of the quantitative analysis indicated that the
fair value of the Alphazyme reporting unit did not exceed its carrying value, and as a result, we recorded
goodwill impairment of $11.9 million during the year ended December 31, 2024.
The
excess of the estimated fair value over carrying value (expressed as a percentage of carrying value for the
respective reporting unit) for the two reporting units not impaired, ranged from approximately 88% to
approximately 275%. In order to evaluate the sensitivity of the fair value calculations used in the goodwill
impairment test, we applied a hypothetical 10% decrease to the fair values of each reporting unit and
compared those hypothetical values to the reporting unit carrying values. Based on this hypothetical 10%
decrease, the excess of the estimated fair value over carrying value (expressed as a percentage of carrying
value for the respective reporting unit) for the two reporting units not impaired, ranged from approximately
69% to approximately 238%. However, to the extent that we continue to experience declines in financial
performance or experience other impairment indicators, such as industry and market considerations, or that
the fair values of our reporting units are less than their carrying values, there could be a risk of
goodwill impairment of our reporting units in future periods.
Recognition
of Intangible Assets as Part of a Business Combination
We
account for our business combinations using the acquisition method of accounting which requires that the
assets acquired and liabilities assumed of acquired businesses be recorded at their respective fair values
at the date of acquisition. The purchase price, which includes the fair value of consideration transferred,
is attributed to the fair value of the assets acquired and
liabilities
assumed. The excess of the purchase price of the acquisition over the fair value of the identifiable net
assets of the acquiree is recorded as goodwill.
Determining
the fair value of intangible assets acquired requires management to use significant judgment and estimates,
including the selection of valuation methodologies, assumptions about future net cash flows, discount rates
and market participants. Each of these factors can significantly affect the value attributed to the
identifiable intangible asset acquired in a business combination.
We
generally utilize a discounted cash flow method under the income approach to estimate the fair value of
identifiable intangible assets acquired in a business combination. For the acquisitions of Alphazyme, LLC
and MyChem, LLC, the estimated fair values of the developed technology intangible assets were based on the
multi-period excess earnings method. The estimated fair values were developed by discounting future net cash
flows to their present value at market-based rates of return. We selected the assumptions used in the
financial forecasts using historical data, supplemented by current and anticipated market conditions,
estimated revenue growth rates, management’s plans, and guideline companies. Some of the more
significant assumptions inherent in estimating the fair value of these intangible assets included revenue
growth rates, discount rates and assumed technical obsolescent curves.
The
use of alternative estimates and assumptions could increase or decrease the estimated fair value and amounts
allocated to identifiable intangible assets acquired and future amortization expense as well as
goodwill.
Recent
Accounting Pronouncements
See
Note 1 to our consolidated financial statements for a discussion of recent accounting standards and
pronouncements.
Item
7A. Quantitative and Qualitative Disclosures About Market Risk
Interest
Rate Risk
As
of December 31, 2024, our primary exposure to interest rate risk was associated with our variable rate
long-term debt. Borrowings under our Credit Agreement bear interest at a rate equal to the Base Rate plus a
margin of 2.00%, with respect to each Base Rate-based loan, or the Term SOFR (Secured Overnight Financing
Rate) plus a margin of 3.00% with respect to each Term SOFR-based loan, subject in each case to an
applicable Base Rate or Term SOFR floor (see Note 10 to our consolidated financial statements). Interest
rates can fluctuate for a number of reasons, including changes in the fiscal and monetary policies or
geopolitical events or changes in general economic conditions. This could adversely affect our cash flows.
As
of December 31, 2024, we have an interest rate cap agreement in place to economically hedge a portion
of our variable interest rate risk on our outstanding long-term debt. The agreement has a contract notional
amount of $500.0 million and entitles us to receive from the counterparty at each calendar quarter end
the amount, if any, by which a specified floating market rate exceeds the cap strike interest rate. The
floating interest rate is reset at the end of each three-month period. The contract expired on
January 19, 2025 and was not renewed.
We
had $299.7 million of outstanding borrowings under our Term Loan and no outstanding borrowings under our
Revolving Credit Facility as of December 31, 2024. For the year ended December 31, 2024, the
effect of a hypothetical 100 basis point increase or decrease in overall interest rates would have changed
our interest expense by approximately $6.1 million.
We
had cash and cash equivalents of $322.4 million as of December 31, 2024. Given the short-term nature of
our investments, we do not believe there is any material risk to the value of our investments with increases
or decreases in interest rates.
Foreign
Currency Risk
All
of our revenue is denominated in U.S. dollars. Although approximately 51.0% of our revenue for the year
ended December 31, 2024 was derived from international sales, primarily in Europe and Asia Pacific, all
of these sales are denominated in U.S. dollars. The majority of our expenses are generally denominated in
the currencies in which they are incurred, which is primarily in the United States. As we endeavor to expand
our presence in international markets, to the extent we are required to enter into agreements denominated in
a currency other than the U.S. dollar, results of operations and cash flows may increasingly be subject to
fluctuations due to changes in foreign currency exchange rates and may be adversely affected in the future
due to changes in foreign currency exchange rates. To date, we have not entered into any hedging
arrangements with respect to foreign currency risk. As our international operations grow, we will continue
to reassess our approach to manage our risk relating to fluctuations in currency rates.
Item
8. Financial Statements and Supplementary Data
INDEX
TO CONSOLIDATED FINANCIAL STATEMENTS
Report
of Independent Registered Public Accounting Firm
To
the Shareholders and the Board of Directors of Maravai LifeSciences Holdings, Inc.
Opinion
on the Financial Statements
We
have audited the accompanying consolidated balance sheets of Maravai LifeSciences Holdings, Inc. (the
Company) as of December 31, 2024 and 2023, the related consolidated statements of operations,
comprehensive (loss) income, changes in stockholders' equity and cash flows for each of the three years in
the period ended December 31, 2024, and the related notes
(collectively
referred to as the “consolidated financial statements”). In our opinion, the consolidated
financial statements present fairly, in all material respects, the financial position of the Company at
December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three
years in the period ended December 31, 2024, in conformity with U.S. generally accepted accounting
principles.
We
also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2024, based
on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (2013 framework),
and
our report dated March 18, 2025 expressed
an
adverse opinion thereon.
Basis
for Opinion
These
financial statements are the responsibility of the Company's management. Our responsibility is to express an
opinion on the Company’s financial statements based on our audits. We are a public accounting firm
registered with the PCAOB and are required to be independent with respect to the Company in accordance with
the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange
Commission and the PCAOB.
We
conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial statements are free of material
misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks
of material misstatement of the financial statements, whether due to error or fraud, and performing
procedures that respond to those risks. Such procedures included examining, on a test basis, evidence
regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the
accounting principles used and significant estimates made by management, as well as evaluating the overall
presentation of the financial statements. We believe that our audits provide a reasonable basis for our
opinion.
Critical
Audit Matters
The
critical audit matters communicated below are matters arising from the current period audit of the financial
statements that were communicated or required to be communicated to the audit committee and that: (1) relate
to accounts or disclosures that are material to the financial statements and (2) involved our especially
challenging, subjective or complex judgments. The communication of critical audit matters does not alter in
any way our opinion on the consolidated
financial
statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing
separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
|
|
|
|
|
|
|
|
|
|
|
Alphazyme
Goodwill Impairment Assessment
|
|
|
|
|
Description
of the Matter
|
|
As
discussed in Note 1 to the consolidated financial statements, goodwill is tested at the
reporting unit level for impairment at least annually or more frequently if indicators of
potential impairment exist. Under the goodwill impairment assessment, if the carrying amount
of a reporting unit exceeds its fair value, an impairment loss is recognized in an amount
equal to the amount of the excess carrying amount of the reporting unit over its fair value,
up to the total amount of goodwill included in the reporting unit. During the current year,
the Company performed a quantitative assessment over the goodwill balance assigned to each
reporting unit as of September 30, 2024 and at December 31, 2024. As discussed in Note
4 to the consolidated financial statements, as a result of the interim impairment assessment
as of December 31, 2024, the Company recorded an impairment loss relating to the
Alphazyme reporting unit, which is contained in the Nucleic Acid Production segment, in the
amount of $11.9 million. Total goodwill as of December 31, 2024 was $159.9 million and
represented 16% of total assets.
|
|
|
|
|
|
Auditing
the Company’s goodwill impairment assessments for the Alphazyme reporting unit as of
September 30, 2024 and December 31, 2024 was challenging and judgmental due to the
estimation required by management to determine the fair value of the reporting unit. In
particular, the estimates are affected by the certain significant assumptions including the
revenue projections and the discount rate used to determine the fair value of the reporting
unit. These assumptions specific to the Alphazyme reporting unit could be affected by future
economic and market conditions.
|
|
|
|
|
How
We Addressed the Matter in Our Audit
|
|
Our
audit procedures over the Company’s goodwill impairment assessment for the Alphazyme
reporting unit included, among others, assessing the reasonableness of significant
assumptions discussed above, and assessing the completeness and accuracy of the underlying
data used by the Company in its analyses. We evaluated whether significant assumptions were
reasonable by comparing them to industry data and current market forecasts, and whether such
assumptions were consistent with evidence obtained in other areas of the audit. We assessed
the historical accuracy of management’s estimates and performed sensitivity analyses
of significant assumptions to evaluate the changes in the fair value of the reporting unit
that would result from changes in the assumptions. We also involved our valuation
specialists to assist us in evaluating the reasonableness of the Company’s valuation
methodologies and certain significant assumptions used by the Company.
|
|
|
|
|
|
Revenue
with distributors
|
|
|
|
|
Description
of the Matter
|
|
During
the year ended December 31, 2024, the Company’s revenues were $259.2 million, of
which a portion relates to products sold to distributors. Its distributor customers resell
the products to end users.
|
|
|
|
|
|
Auditing
the Company’s product sales to distributors was challenging, specifically related to
the effort required to audit the respective sales activity to assess whether incentives were
provided that were not properly recognized. These audit procedures involved judgmentally
assessing factors including distributor customer ordering patterns, contractual terms,
incentives offered, and after shipment credits or free goods as described in Note 1 to the
consolidated financial statements.
|
|
|
|
|
How
We Addressed the Matter in Our Audit
|
|
Our
audit procedures over the Company’s product sales to distributor customers included,
among others, performing analytical procedures to detect and investigate anomalies within
the data. We also examined the terms and conditions of selected new or amended contracts
with distributor customers and the impact of those terms and conditions on the
Company’s recognition model. We also confirmed the terms and conditions of contracts
directly with a selection of distributor customers, including whether there are side
agreements and terms not formally included in the contract that may impact the
Company’s revenue recognition. In addition, we directly obtained written
representations from members of the commercial organization regarding the completeness of
the terms and conditions reported to the legal and accounting departments.
|
/s/
Ernst & Young LLP
We
have served as the Company’s auditor since 2016.
San Mateo, California
March 18,
2025
MARAVAI
LIFESCIENCES HOLDINGS, INC.
CONSOLIDATED
BALANCE SHEETS
(in
thousands, except par value)
|
|
|
|
|
|
|
|
|
|
|
|
|
December
31, |
|
2024
|
|
2023
|
|
Assets
|
|
|
|
|
Current
assets: |
|
|
|
|
Cash
and cash equivalents |
$
|
322,399
|
|
|
$
|
574,962
|
|
|
Accounts
receivable, net |
38,520
|
|
|
54,605
|
|
|
Inventory
|
50,082
|
|
|
51,397
|
|
|
Prepaid
expenses and other current assets |
18,145
|
|
|
18,948
|
|
|
|
|
|
|
Total
current assets |
429,146
|
|
|
699,912
|
|
|
Property
and equipment, net |
164,474
|
|
|
162,900
|
|
|
Goodwill
|
159,878
|
|
|
326,029
|
|
|
Intangible
assets, net |
194,957
|
|
|
220,987
|
|
|
|
|
|
|
Other
assets |
59,789
|
|
|
77,622
|
|
|
Total
assets |
$
|
1,008,244
|
|
|
$
|
1,487,450
|
|
|
Liabilities
and stockholders’ equity |
|
|
|
|
Current
liabilities: |
|
|
|
|
Accounts
payable |
$
|
11,957
|
|
|
$
|
10,729
|
|
|
Accrued
expenses and other current liabilities |
36,407
|
|
|
60,237
|
|
|
Deferred
revenue |
2,375
|
|
|
3,360
|
|
|
Current
portion of payable to related parties pursuant to the Tax Receivable Agreement |
—
|
|
|
7,069
|
|
|
Current
portion of long-term debt |
5,440
|
|
|
5,440
|
|
|
Current
portion of finance lease liabilities |
792
|
|
|
633
|
|
|
Total
current liabilities |
56,971
|
|
|
87,468
|
|
|
Long-term
debt, less current portion |
290,492
|
|
|
518,707
|
|
|
Finance
lease liabilities, less current portion |
31,106
|
|
|
31,897
|
|
|
|
|
|
|
|
|
|
|
Other
long-term liabilities |
52,466
|
|
|
59,494
|
|
|
Total
liabilities |
431,035
|
|
|
697,566
|
|
|
Commitments
and contingencies (Note 9)
|
|
|
|
|
Stockholders’
equity: |
|
|
|
|
Class
A common stock, $
0.01
par value -
500,000
shares authorized;
141,976
and
132,228
shares issued and outstanding as of December 31, 2024 and 2023,
respectively
|
1,420
|
|
|
1,322
|
|
|
Class
B common stock, $
0.01
par value - 256,856 and 300,000 shares
authorized as of December 31, 2024 and 2023, respectively;
110,684
and
119,094
shares issued and outstanding as of December 31, 2024 and 2023,
respectively
|
1,107
|
|
|
1,191
|
|
|
Additional
paid-in capital |
181,874
|
|
|
128,503
|
|
|
Retained
earnings |
140,891
|
|
|
285,737
|
|
|
|
|
|
|
Total
stockholders’ equity attributable to Maravai LifeSciences Holdings, Inc. |
325,292
|
|
|
416,753
|
|
|
Non-controlling
interest |
251,917
|
|
|
373,131
|
|
|
Total
stockholders’ equity |
577,209
|
|
|
789,884
|
|
|
Total
liabilities and stockholders’ equity |
$
|
1,008,244
|
|
|
$
|
1,487,450
|
|
The
accompanying notes are an integral part of these consolidated financial statements.
MARAVAI
LIFESCIENCES HOLDINGS, INC.
CONSOLIDATED
STATEMENTS OF OPERATIONS
(in
thousands, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December
31, |
|
2024
|
|
2023
|
|
2022
|
|
Revenue
|
$
|
259,185
|
|
|
$
|
288,945
|
|
|
$
|
883,001
|
|
|
Operating
expenses: |
|
|
|
|
|
|
Cost
of revenue |
150,876
|
|
|
148,743
|
|
|
168,957
|
|
|
Selling,
general and administrative |
161,771
|
|
|
151,390
|
|
|
129,259
|
|
|
Research
and development |
19,221
|
|
|
17,280
|
|
|
18,369
|
|
|
Change
in estimated fair value of contingent consideration |
(
2,003) |
|
|
(
3,286) |
|
|
(
7,800) |
|
|
Goodwill
impairment
|
166,151
|
|
|
—
|
|
|
—
|
|
|
Restructuring
|
(
1,214
) |
|
|
6,466
|
|
|
—
|
|
|
Total
operating expenses |
494,802
|
|
|
320,593
|
|
|
308,785
|
|
|
(Loss)
income from operations |
(
235,617
) |
|
|
(
31,648
) |
|
|
574,216
|
|
|
Other
income (expense): |
|
|
|
|
|
|
Interest
expense |
(
47,700) |
|
|
(
45,892) |
|
|
(
20,414) |
|
|
Interest
income |
27,403
|
|
|
27,727
|
|
|
2,338
|
|
|
Loss
on extinguishment of debt |
(
3,187) |
|
|
—
|
|
|
(
208
) |
|
|
Change
in payable to related parties pursuant to the Tax Receivable Agreement |
(
40) |
|
|
668,886
|
|
|
(
4,102) |
|
|
Other
expense
|
(
2,341) |
|
|
(
1,337) |
|
|
(
358
) |
|
|
(Loss)
income before income taxes
|
(
261,482) |
|
|
617,736
|
|
|
551,472
|
|
|
Income
tax (benefit) expense
|
(
1,860) |
|
|
756,111
|
|
|
60,809
|
|
|
Net
(loss) income |
(
259,622) |
|
|
(
138,375) |
|
|
490,663
|
|
|
Net
(loss) income attributable to non-controlling interests |
(
114,776) |
|
|
(
19,346) |
|
|
270,458
|
|
|
Net
(loss) income attributable to Maravai LifeSciences Holdings, Inc. |
$
|
(
144,846
) |
|
|
$
|
(
119,029
) |
|
|
$
|
220,205
|
|
|
|
|
|
|
|
|
Net
(loss) income per Class A common share attributable to Maravai LifeSciences Holdings,
Inc.: |
|
|
|
|
|
|
Basic
|
$
|
(
1.05) |
|
|
$
|
(
0.90) |
|
|
$
|
1.67
|
|
|
Diluted
|
$
|
(
1.05)
|
|
|
$
|
(
0.90)
|
|
|
$
|
1.67
|
|
|
|
|
|
|
|
|
Weighted
average number of Class A common shares outstanding:
|
|
|
|
|
|
|
Basic
|
137,906
|
|
|
131,919
|
|
|
131,545
|
|
|
Diluted
|
137,906
|
|
|
131,919
|
|
|
255,323
|
|
The
accompanying notes are an integral part of these consolidated financial statements.
MARAVAI
LIFESCIENCES HOLDINGS, INC.
CONSOLIDATED
STATEMENTS OF COMPREHENSIVE (LOSS) INCOME
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December
31, |
|
2024
|
|
2023
|
|
2022
|
|
Net
(loss) income
|
$
|
(
259,622) |
|
|
$
|
(
138,375) |
|
|
$
|
490,663
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive
(loss) income attributable to non-controlling interests
|
(
114,776) |
|
|
(
19,346) |
|
|
270,458
|
|
|
Total
comprehensive (loss) income attributable to Maravai LifeSciences Holdings, Inc.
|
$
|
(
144,846) |
|
|
$
|
(
119,029) |
|
|
$
|
220,205
|
|
The
accompanying notes are an integral part of the consolidated financial statements.
MARAVAI
LIFESCIENCES HOLDINGS, INC.
CONSOLIDATED
STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Class
A Common Stock |
|
Class
B Common Stock |
|
|
|
|
|
|
|
|
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
Additional
Paid-In Capital |
|
Retained
Earnings |
|
Non-controlling
Interest |
|
Total
Stockholders’ Equity
|
|
December
31, 2021 |
131,488
|
|
$
|
1,315
|
|
|
123,669
|
|
$
|
1,237
|
|
|
$
|
128,386
|
|
|
$
|
184,561
|
|
|
$
|
229,862
|
|
|
$
|
545,361
|
|
|
Issuance
of Class A common stock under employee equity plans, net of shares withheld for employee
taxes |
204
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
2,303
|
|
|
—
|
|
|
—
|
|
|
2,305
|
|
|
Non-controlling
interest adjustment for changes in proportionate ownership in Topco LLC |
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(
864) |
|
|
—
|
|
|
864
|
|
|
—
|
|
|
Stock-based
compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9,623
|
|
|
—
|
|
|
9,047
|
|
|
18,670
|
|
|
Distribution
for tax liabilities to non-controlling interest holder |
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
141
|
|
|
—
|
|
|
(
150,206) |
|
|
(
150,065) |
|
|
Impact
of change to deferred tax asset associated with cash contribution to Topco LLC |
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(
1,691) |
|
|
—
|
|
|
—
|
|
|
(
1,691) |
|
|
Net
income |
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
220,205
|
|
|
270,458
|
|
|
490,663
|
|
|
December
31, 2022 |
131,692
|
|
1,317
|
|
|
123,669
|
|
1,237
|
|
|
137,898
|
|
|
404,766
|
|
|
360,025
|
|
|
905,243
|
|
|
Effects
of Structuring Transactions |
—
|
|
|
—
|
|
|
(
4,575) |
|
|
(
46
) |
|
|
(
25,404) |
|
|
—
|
|
|
26,392
|
|
|
942
|
|
|
Issuance
of Class A common stock under employee equity plans, net of shares withheld for employee
taxes |
536
|
|
|
5
|
|
|
—
|
|
|
—
|
|
|
116
|
|
|
—
|
|
|
—
|
|
|
121
|
|
|
Non-controlling
interest adjustment for changes in proportionate ownership in Topco LLC |
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
754
|
|
|
—
|
|
|
(
754) |
|
|
—
|
|
|
Stock-based
compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
18,167
|
|
|
—
|
|
|
16,421
|
|
|
34,588
|
|
|
Distribution
for tax liabilities to non-controlling interest holder |
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(
9,607) |
|
|
(
9,607) |
|
|
Impact
of change to deferred tax asset associated with stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(
3,028) |
|
|
—
|
|
|
—
|
|
|
(
3,028) |
|
|
Net
loss |
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(
119,029) |
|
|
(
19,346) |
|
|
(
138,375) |
|
|
December
31, 2023 |
132,228
|
|
1,322
|
|
|
119,094
|
|
1,191
|
|
|
128,503
|
|
|
285,737
|
|
|
373,131
|
|
|
789,884
|
|
|
Effect
of exchange of LLC Units |
8,410
|
|
|
84
|
|
|
(
8,410) |
|
|
(
84
) |
|
|
26,004
|
|
|
—
|
|
|
(
26,004) |
|
|
—
|
|
|
Issuance
of Class A common stock under employee equity plans, net of shares withheld for employee
taxes |
1,338
|
|
|
14
|
|
|
—
|
|
|
—
|
|
|
(
1,988) |
|
|
—
|
|
|
—
|
|
|
(
1,974) |
|
|
Non-controlling
interest adjustment for changes in proportionate ownership in Topco LLC |
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,349
|
|
|
—
|
|
|
(
2,349) |
|
|
—
|
|
|
Stock-based
compensation |
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
27,006
|
|
|
—
|
|
|
22,409
|
|
|
49,415
|
|
|
Distribution
for tax liabilities to non-controlling interest holder |
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(
494) |
|
|
(
494) |
|
|
Net
loss |
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(
144,846) |
|
|
(
114,776) |
|
|
(
259,622) |
|
|
December
31, 2024 |
141,976
|
|
$
|
1,420
|
|
|
110,684
|
|
$
|
1,107
|
|
|
$
|
181,874
|
|
|
$
|
140,891
|
|
|
$
|
251,917
|
|
|
$
|
577,209
|
|
The
accompanying notes are an integral part of the consolidated financial statements.
MARAVAI
LIFESCIENCES HOLDINGS, INC.
CONSOLIDATED
STATEMENTS OF CASH FLOWS
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December
31, |
|
2024
|
|
2023
|
|
2022
|
|
Operating
activities: |
|
|
|
|
|
|
Net
(loss) income |
$
|
(
259,622) |
|
|
$
|
(
138,375) |
|
|
$
|
490,663
|
|
|
Adjustments
to reconcile net (loss) income to net cash provided by operating activities:
|
|
|
|
|
|
|
Depreciation
|
20,852
|
|
|
12,898
|
|
|
7,566
|
|
|
Amortization
of intangible assets |
27,531
|
|
|
27,356
|
|
|
24,269
|
|
|
Amortization
of operating lease right-of-use assets
|
8,482
|
|
|
8,527
|
|
|
6,268
|
|
|
Amortization
of deferred financing costs |
2,896
|
|
|
2,929
|
|
|
2,788
|
|
|
Stock-based
compensation expense
|
49,415
|
|
|
34,588
|
|
|
18,670
|
|
|
Loss
on extinguishment of debt |
3,187
|
|
|
—
|
|
|
208
|
|
|
Deferred
income taxes |
11
|
|
|
754,942
|
|
|
42,318
|
|
|
Change
in estimated fair value of contingent consideration |
(
2,003) |
|
|
(
3,286) |
|
|
(
7,800) |
|
|
Goodwill
impairment |
166,151
|
|
|
—
|
|
|
—
|
|
|
Revaluation
of liabilities under the Tax Receivable Agreement |
40
|
|
|
(
668,886) |
|
|
4,102
|
|
|
Acquisition
related tax adjustment
|
2,306
|
|
|
1,293
|
|
|
349
|
|
|
Other
|
833
|
|
|
(
3,606) |
|
|
(
8,342) |
|
|
Changes
in operating assets and liabilities, net of acquisitions: |
|
|
|
|
|
|
Accounts
receivable |
14,359
|
|
|
84,395
|
|
|
(
22,272) |
|
|
Inventory
|
377
|
|
|
649
|
|
|
9,459
|
|
|
Prepaid
expenses and other current and noncurrent assets
|
1,966
|
|
|
8,136
|
|
|
(
35,900) |
|
|
|
|
|
|
|
|
Accounts
payable |
723
|
|
|
5,284
|
|
|
(
1,578) |
|
|
Accrued
expenses and other current liabilities |
(
22,754) |
|
|
15,108
|
|
|
8,503
|
|
|
Deferred
revenue |
(
986
) |
|
|
250
|
|
|
(
7,123) |
|
|
Other
long-term liabilities |
(
6,299) |
|
|
(
15,978) |
|
|
3,829
|
|
|
Net
cash provided by operating activities |
7,465
|
|
|
126,224
|
|
|
535,977
|
|
|
Investing
activities: |
|
|
|
|
|
|
Cash
paid for acquisition, net of cash acquired |
—
|
|
|
(
69,622) |
|
|
(
238,969) |
|
|
Acquisition
deposit
|
(
300)
|
|
|
—
|
|
|
—
|
|
|
Purchases
of property and equipment |
(
29,658) |
|
|
(
65,553) |
|
|
(
17,090) |
|
|
Proceeds
from government assistance allocated to property and equipment
|
7,142
|
|
|
12,865
|
|
|
1,105
|
|
|
Prepaid
lease payments on finance lease yet to commence |
—
|
|
|
—
|
|
|
(
13,278) |
|
|
Purchase
of technology
|
(
1,500) |
|
|
—
|
|
|
—
|
|
|
Proceeds
from sale of business, net of cash divested |
—
|
|
|
—
|
|
|
620
|
|
|
Net
cash used in investing activities
|
(
24,316) |
|
|
(
122,310) |
|
|
(
267,612) |
|
|
Financing
activities: |
|
|
|
|
|
|
Distributions
to non-controlling interests holders |
(
494
) |
|
|
(
9,607) |
|
|
(
150,206) |
|
|
Proceeds
from borrowings of long-term debt, net of discount |
953
|
|
|
—
|
|
|
8,455
|
|
|
Principal
repayments of long-term debt |
(
234,393) |
|
|
(
5,440) |
|
|
(
13,895) |
|
|
Financing
costs paid to acquire long-term debt
|
(
1,241) |
|
|
—
|
|
|
—
|
|
|
Payments
of finance lease liabilities |
(
633
) |
|
|
(
332
) |
|
|
—
|
|
|
Proceeds
from interest rate cap agreement
|
9,287
|
|
|
6,168
|
|
|
—
|
|
|
Payment
of acquisition consideration holdback |
—
|
|
|
(
9,706) |
|
|
—
|
|
|
Payments
to MLSH 1 pursuant to the Tax Receivable Agreement |
(
6,014) |
|
|
(
35,661) |
|
|
(
29,108) |
|
|
Payments
to MLSH 2 pursuant to the Tax Receivable Agreement |
(
1,095) |
|
|
(
6,492) |
|
|
(
5,103) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December
31, |
|
2024
|
|
2023
|
|
2022
|
|
(Taxes
paid for shares withheld) proceeds from issuance of Class A common stock under employee equity
plans, net |
(
2,082) |
|
|
(
20) |
|
|
2,358
|
|
|
Net
cash used in financing activities
|
(
235,712) |
|
|
(
61,090) |
|
|
(
187,499) |
|
|
|
|
|
|
|
|
Net
(decrease) increase in cash and cash equivalents |
(
252,563) |
|
|
(
57,176) |
|
|
80,866
|
|
|
Cash
and cash equivalents, beginning of period |
574,962
|
|
|
632,138
|
|
|
551,272
|
|
|
Cash
and cash equivalents, end of period |
$
|
322,399
|
|
|
$
|
574,962
|
|
|
$
|
632,138
|
|
|
|
|
|
|
|
|
Supplemental
cash flow information: |
|
|
|
|
|
|
Cash
paid for interest |
$
|
50,973
|
|
|
$
|
44,256
|
|
|
$
|
20,198
|
|
|
Cash
paid (refunded) for income taxes, net
|
$
|
670
|
|
|
$
|
(
2,987
) |
|
|
$
|
23,032
|
|
|
|
|
|
|
|
|
Supplemental
disclosures of non-cash activities: |
|
|
|
|
|
|
Property
and equipment included in accounts payable and accrued expenses |
$
|
2,616
|
|
|
$
|
2,011
|
|
|
$
|
1,701
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accrued
receivable for capital expenditures to be reimbursed under a government contract |
$
|
734
|
|
|
$
|
1,118
|
|
|
$
|
—
|
|
|
Right-of-use
assets obtained in exchange for finance lease liabilities
|
$
|
—
|
|
|
$
|
32,862
|
|
|
$
|
—
|
|
|
Right-of-use
assets obtained in exchange for operating lease liabilities
|
$
|
1,287
|
|
|
$
|
3,931
|
|
|
$
|
17,513
|
|
|
Fair
value of contingent consideration liability recorded in connection with acquisition of a
business |
$
|
—
|
|
|
$
|
5,289
|
|
|
$
|
7,800
|
|
|
Accrued
consideration payable for MyChem acquisition |
$
|
—
|
|
|
$
|
—
|
|
|
$
|
10,000
|
|
The
accompanying notes are an integral part of the consolidated financial statements.
MARAVAI
LIFESCIENCES HOLDINGS, INC.
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
1.
Organization
and Significant Accounting Policies
Description
of Business
Maravai
LifeSciences Holdings, Inc. (the “Company”, and together with its consolidated subsidiaries,
“Maravai”, “we”, “us”, and “our”) provides critical
products to enable the development of drugs, therapeutics, diagnostics, vaccines and support research on
human diseases. Our products address the key phases of biopharmaceutical development and include complex
nucleic acids for diagnostic and therapeutic applications and antibody-based products to detect
impurities during the production of biopharmaceutical products.
The
Company is headquartered in San Diego, California and operates in two principal businesses: Nucleic Acid Production and
Biologics Safety Testing. Our Nucleic Acid Production business manufactures and sells products used in
the fields of gene therapy, vaccines, nucleoside chemistry, oligonucleotide therapy and molecular
diagnostics, including reagents used in the chemical synthesis, modification, labelling and purification
of deoxyribonucleic acid (“DNA”) and ribonucleic acid (“RNA”). Our core Nucleic
Acid Production offerings include messenger ribonucleic acid (“mRNA”), long and short
oligonucleotides, our proprietary CleanCap® capping technology and oligonucleotide building blocks,
and custom enzyme development and manufacturing. Our Biologics Safety Testing business sells highly
specialized analytical products for use in biologic manufacturing process development, including custom
product-specific development antibody and assay development services.
Organization
We
were incorporated as a Delaware corporation in August 2020 for the purpose of facilitating an initial
public offering (“IPO”). Immediately prior to the IPO, we effected a series of
organizational transactions (the “Organizational Transactions”), which, together with the
IPO, were completed in November 2020, that resulted in the Company operating, controlling all of the
business affairs and becoming the ultimate parent company of Maravai Topco Holdings, LLC (“Topco
LLC”) and its consolidated subsidiaries. Maravai Life Sciences Holdings, LLC (“MLSH
1”), which is controlled by investment entities affiliated with GTCR, is the only other member of
Topco LLC.
The
Company is the sole managing member of Topco LLC, which operates and controls TriLink Biotechnologies,
LLC (“TriLink”), Glen Research, LLC, Cygnus Technologies, LLC and Alphazyme, LLC
(“Alphazyme”) and their respective subsidiaries.
Basis
of Presentation
The
Company operates and controls all of the business and affairs of Topco LLC, and, through Topco LLC
and its subsidiaries, conducts its business. Because we manage and operate the business and control
the strategic decisions and day-to-day operations of Topco LLC and also have a substantial financial
interest in Topco LLC, we consolidate the financial results of Topco LLC, and a portion of our net
(loss) income is allocated to the non-controlling interests in Topco LLC held by MLSH 1.
The
accompanying consolidated financial statements have been prepared in accordance with accounting
principles generally accepted in the United States of America ("U.S. GAAP") pursuant to the rules
and regulations of the Securities and Exchange Commission (“SEC”) and include our
accounts and the accounts of our subsidiaries.
All
intercompany transactions and accounts between the businesses comprising the Company have been
eliminated in the accompanying consolidated financial statements.
Certain
prior period amounts have been reclassified to conform to the current period presentation.
Variable
Interest Entities
The
Company consolidates all entities that it controls through a majority voting interest or as the
primary beneficiary of a variable interest entity (“VIE”). In determining whether the
Company is the primary beneficiary of an entity, the Company applies a qualitative approach that
determines whether it has both (i) the power to direct the economically significant activities of
the entity and (ii) the obligation to absorb losses of, or the right to receive benefits from, the
entity that could potentially be significant to that entity. The Company’s determination about
whether it should consolidate such VIEs is made continuously as changes to existing relationships or
future transactions may result in a consolidation event.
Use
of Estimates
The
preparation of consolidated financial statements in accordance with GAAP requires the Company to
make judgements, estimates and assumptions that affect the reported amounts of assets, liabilities,
equity, revenue and expenses, and related disclosures. These estimates form the basis for judgments
the Company makes about the carrying values of assets and liabilities that are not readily apparent
from other sources. The Company bases its estimates and judgments on historical experience and on
various other assumptions that the Company believes are reasonable under the circumstances. These
estimates are based on management’s knowledge about current events and expectations about
actions the Company may undertake in the future. Significant estimates include, but are not limited
to, the measurement of right-of-use assets and lease liabilities and related incremental borrowing
rate, the payable to related parties pursuant to the Tax Receivable Agreement (as defined in Note
14), the realizability of our net deferred tax assets, valuation of goodwill and intangible assets,
and determination of fair value of contingent consideration. Actual results could differ materially
from those estimates.
Revenue
Recognition
The
Company generates revenue primarily from the sale of products, and to a much lesser extent, services
in the fields of nucleic acid production and biologics safety testing. Products are sold primarily
through a direct sales force and through distributors in certain international markets where the
Company does not have a direct commercial presence.
Revenue
is recognized when control of promised goods or services is transferred to a customer or distributor
in an amount that reflects the consideration to which the entity expects to be entitled in exchange
for those goods or services. Distributors are the principal in all sales transactions with its
customers. To determine revenue recognition for its arrangements with customers, the Company
performs the following five steps: (i) identify the contract(s) with a customer;
(ii) identify the performance obligations in the contract; (iii) determine the transaction
price; (iv) allocate the transaction price to the performance obligations in the contract; and
(v) recognize revenue when (or as) the entity satisfies a performance obligation.
The
majority of the Company’s contracts include only one performance obligation. A performance
obligation is a promise in a contract to transfer a distinct good or service to the customer and is
defined as the unit of account for revenue recognition. The Company also recognizes revenue from
other contracts that may include a combination of products and services, the provision of solely
services, or from license fee arrangements which may be associated with the delivery of product.
Where there is a combination of products and services, the Company accounts for the promises as
individual performance obligations if they are concluded to be distinct. Performance obligations are
considered distinct if they are both capable of being distinct and distinct within the context of
the contract. In determining whether performance obligations meet the criteria for being distinct,
the Company considers a number of factors, such as the degree of interrelation and interdependence
between obligations, and whether or not the good or service significantly modifies or transforms
another good or service in the contract. As a practical expedient, we do not adjust the transaction
price for the effects of a significant financing component if, at contract inception, the period
between customer payment and the transfer of goods or services is expected to be one year or less.
Contracts with customers are evaluated on a contract-by-contract basis as contracts may include
multiple types of goods and services as described below.
The
Company recognizes revenue from sales to customers through distributors consistently with the
policies and practices for direct sales to customers, as described above.
Nucleic
Acid Production
Nucleic
Acid Production revenue is generated from the manufacture and sale of highly modified, complex
nucleic acid products to support the needs of our of customers’ research, therapeutic and
vaccine programs. The primary offering of products includes CleanCap, mRNA, specialized
oligonucleotides, and enzymes. Contracts typically consist of a single performance obligation. We
also sell nucleic acid products for labeling and detecting proteins in cells and tissue samples
research. The Company recognizes revenue from these products in the period in which the performance
obligation is satisfied by transferring control to the customer or distributor. Revenue for nucleic
acid catalog products is recognized at a single point in time,
generally upon transferring control to
the customer or distributor. Revenue for contracts for certain custom nucleic acid products, with an
enforceable right to payment and a reasonable margin for work performed to date, is recognized over
time, based on a cost-to-cost input method over the manufacturing period. Payments received from
customers in advance of manufacturing their products is recorded as deferred revenue until the
products are delivered.
Biologics
Safety Testing
The
Company’s Biologics Safety Testing revenue is associated with the sale of host cell protein,
bioprocess impurity detection, viral clearance prediction kits and associated products. We also
enter into contracts that include custom antibody development, assay development, antibody affinity
extraction and mass spectrometry services. These
products
and services enable the detection of impurities that occur in the manufacturing of biologic drugs
and other therapeutics including cell and gene therapies. The Company recognizes revenue from the
sale of kits and products in the period in which the performance obligation is satisfied by
transferring control to the customer. Custom antibody development contracts consist of a single
performance obligation, typically with an enforceable right to payment and a reasonable margin for
work performed to date. Revenue is recognized over time based on a cost-to-cost input method over
the contract term. Where an enforceable right to payment does not exist, revenue is recognized at a
point in time when control is transferred to the customer. Assay development service contracts
consist of a single performance obligation, revenue is recognized at a point in time when a
successful antigen test and report is provided to the customer. Affinity extraction, mass
spectrometry and other analytical services, which generally occur over a short period of time,
consist of a single performance obligation to perform the service and provide a summary report to
the customer. Revenue is recognized upon delivery of the report to the customer or
distributor.
The
Company elected the practical expedient to not disclose the unfulfilled performance
obligations for contracts with an original length of one year or less. The Company
had no material unfulfilled performance obligations for contracts with an original length greater
than one year for any period presented.
The
Company accepts returns only if the products do not meet specifications and historically, the
Company’s volume of product returns has not been significant. Further, no warranties are
provided for promised goods and services other than assurance type warranties, which were not
material for any period presented.
Revenue
for an individual contract is recognized at the related transaction price, which is the amount the
Company expects to be entitled to in exchange for transferring the products and/or services. The
transaction price for product sales is calculated at the contracted product selling price. The
transaction price for a contract with multiple performance obligations is allocated to the separate
performance obligations on a relative standalone selling price basis. Standalone selling prices for
products are determined based on the prices charged to customers, which are directly observable.
Standalone selling price of services are mostly based on time and materials. Generally, payments
from customers are due when goods and services are transferred. As most contracts contain a single
performance obligation, the transaction price is representative of the standalone selling price
charged to customers. Revenue is recognized only to the extent that it is probable that a
significant reversal of the cumulative amount recognized will not occur in future periods. Variable
consideration has not been material to our consolidated financial statements.
Sales
taxes
Sales
taxes collected by the Company are not included in the transaction price as revenue as they are
ultimately remitted to a governmental authority.
Shipping
and handling costs
The
Company has elected to account for shipping and handling activities related to contracts with
customers as costs to fulfill the promise to transfer the associated products. Accordingly, revenue
for shipping and handling is recognized at the same time that the related product revenue is
recognized.
Contract
costs
The
Company recognizes the incremental costs of obtaining contracts as an expense when incurred when the
amortization period of the assets that otherwise would have been recognized is one year or less.
These costs are included in sales and marketing and general and administrative expenses. The costs
to fulfill the contracts are determined to be immaterial and are recognized as an expense when
incurred.
Contract
balances
Contract
assets are generated when contractual billing schedules differ from revenue recognition timing and
the Company records contract receivable when it has an unconditional right to consideration. There
were
no
contract asset balances as of December 31, 2024 or 2023.
Contract liabilities include billings in excess of
revenue recognized, such as customer deposits and deferred revenue. Customer deposits, which are
included in accrued expenses and other current liabilities, are recorded when cash payments are
received or due in advance of performance. Deferred revenue is recorded when the Company has
unsatisfied performance obligations. Total contract liabilities were $3.3 million and $5.5
million as of December 31, 2024 and 2023, respectively. Contract liabilities
are generally expected to be recognized into revenue within the next twelve months.
During
the year ended December 31, 2024, the Company recognized $3.7 million
of revenue that was included in the contract liabilities balance of $5.5
million as
of December 31, 2023. During the year ended December 31, 2023, such amount was not material for the contract liabilities balance as of
December 31, 2022.
Disaggregation
of Revenue
The
following tables summarize the revenue by segment and region for the periods presented (in
thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year
Ended December 31, 2024 |
|
Nucleic Acid
Production |
|
Biologics
Safety Testing |
|
Total
|
| North
America |
$
|
100,367
|
|
$
|
26,723
|
|
$
|
127,090
|
| Europe,
the Middle East and Africa |
26,446
|
|
15,609
|
|
42,055
|
| Asia
Pacific |
69,322
|
|
20,056
|
|
89,378
|
| Latin
and Central America |
210
|
|
452
|
|
662
|
|
Total
revenue |
$
|
196,345
|
|
$
|
62,840
|
|
$
|
259,185
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year
Ended December 31, 2023 |
|
Nucleic Acid
Production |
|
Biologics
Safety Testing |
|
Total
|
| North
America |
$
|
114,459
|
|
$
|
26,596
|
|
$
|
141,055
|
| Europe,
the Middle East and Africa |
34,390
|
|
15,532
|
|
49,922
|
| Asia
Pacific |
75,716
|
|
21,725
|
|
97,441
|
| Latin
and Central America |
204
|
|
323
|
|
527
|
|
Total
revenue |
$
|
224,769
|
|
$
|
64,176
|
|
$
|
288,945
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year
Ended December 31, 2022 |
|
Nucleic Acid
Production |
|
Biologics
Safety Testing |
|
Total
|
| North
America |
$
|
312,119
|
|
$
|
27,354
|
|
$
|
339,473
|
| Europe,
the Middle East and Africa |
415,298
|
|
17,628
|
|
432,926
|
| Asia
Pacific |
85,508
|
|
24,286
|
|
109,794
|
| Latin
and Central America |
144
|
|
664
|
|
808
|
|
Total
revenue |
$
|
813,069
|
|
$
|
69,932
|
|
$
|
883,001
|
Total
revenue is attributed to geographic regions based on the bill-to location of the transaction. For all
periods presented, the majority of our revenue was recognized at a point in time.
Shipping
and Handling Costs
Shipping
and handling costs, which are charged to customers, are included in revenue. Shipping and handling
charges included in revenue were approxima
tely $4.1
million
,
$3.5 million and $3.2 million for the
years ended December 31, 2024, 2023 and 2022, respectively. Freight
and supplies costs directly associated with shipping products to customers are included as a
component of cost of revenue.
Research
and Development
Research
and development (“R&D”) expenses include personnel costs, including salaries,
benefits and stock-based compensation for laboratory personnel, outside contracted services, and
costs of supplies. R&D costs are expensed as incurred. Payments made prior to the receipt of
goods or services to be used in R&D are recognized as prepaid assets until the goods are
received or services are rendered.
Advertising
Costs
The Company expenses advertising costs as incurred.
Advertising costs incurred were approximatel
y
$3.5 million,
$2.9 million and $2.5
million during the years ended December 31, 2024, 2023 and 2022,
respectively.
Restructuring
Costs
Restructuring
costs relate to a cost realignment plan implemented by the Company in November 2023 to optimize
business operations and match them to current market conditions. Restructuring costs are comprised
of severance and other employee-related costs, facility and other exit costs, professional fees and
other restructuring costs.
Employee
separation costs principally consist of one-time termination benefits and other post-employment
benefits. One-time termination benefits are expensed at the date the entity notifies the employee,
unless the employee must provide future service, in which case the benefits are expensed over the
future service period. Other post-employment benefits are expensed when the obligation is probable
and the benefit amounts are estimable. Other costs associated with restructuring activities,
including facility and other exist costs and professional fees, are expensed as they are
incurred.
Stock-Based
Compensation
The
Company recognized stock-based compensation for all equity awards made to employees, non-employee
directors and contractors based upon the awards’ estimated grant date fair value. For equity
awards that vest subject to the satisfaction of service requirements, compensation expense is
measured based on the fair value of the award on the date of grant and expense is recognized on a
straight-line basis over the requisite service period, which is typically between one to four years. We account for forfeitures as
they occur. Stock-based compensation is classified in the accompanying consolidated statements of
operations based on the function to which the related services are provided.
The
Company estimates the fair value of stock option grants using the Black-Scholes option pricing
model. The assumptions used in estimating the fair value of these awards, such as expected term,
expected dividend yield, volatility and risk-free interest rate, represent management’s best
estimates and involve inherent uncertainties and the application of management’s judgment. If
actual results are not consistent with the Company’s assumptions and judgments used in making
these estimates, the Company may be required to increase or decrease compensation expense, which
could be material to the Company’s consolidated results of operations.
The
fair value of restricted stock units (“RSUs”) is determined based on the number of
shares granted and the quoted market price of the Company’s Class A common stock on the date
of grant.
For
performance stock units (“PSUs”) which are subject to service and market conditions,
compensation expense is measured based on the fair value of the award on the date of grant and
expense is recognized on a straight-line basis over the requisite service period regardless if the
market condition is satisfied. If the grantee is terminated prior to meeting both conditions, any
previously recognized expense is reversed. The Company estimates the fair value of PSUs using the
Monte Carlo simulation model. The assumptions used in estimating the fair value of these awards,
such as expected term, volatility and risk-free interest rate, represent management’s best
estimates and involve inherent uncertainties and the application of management’s
judgment.
For
PSUs which are subject to a performance condition, compensation expense is recognized on a
straight-line basis over the requisite service period when the achievement of such performance
condition is determined probable, and upon achieving such performance condition that was not
previously considered as probable, records a cumulative catch-up adjustment to reflect the portion
of the grantee’s requisite service that has been provided to date. If a performance condition
is not determined probable or is not met, no compensation expense is recognized, and any previously
recognized expense is reversed. The fair value of such PSUs is determined based on the quoted market
price of the Company’s Class A common stock on the date of grant.
Income
Taxes
We
are subject to U.S. federal and state income taxes. We are the controlling member of Topco LLC,
which has been, and will continue to be, treated as a partnership for U.S. federal and state income
tax purposes. Topco LLC’s wholly-owned subsidiary, Maravai LifeSciences International
Holdings, Inc., is a taxpaying entity for U.S. and foreign jurisdictions and had limited activity
subject to a transfer pricing arrangement during the year ended December 31, 2024. Topco
LLC’s other subsidiaries are treated as pass-through entities for federal and state income tax
purposes. The income or loss generated by these entities is not taxed at the LLC level. As required
by U.S. tax law, income or loss generated by these LLCs passes through to their owners. As such, our
tax provision consists solely of the activities of Maravai LifeSciences International Holdings,
Inc., as well as our share of income or loss generated by Topco LLC.
We
account for income taxes under the asset and liability method of accounting. Current income tax
expense or benefit represents the amount of income taxes expected to be payable or refundable for
the current year. We recognize deferred tax assets and liabilities for the future tax consequences
attributable to differences between the financial statement carrying amounts of existing assets and
liabilities and their respective tax bases, as well as for operating loss and tax credit
carryforwards. We measure deferred tax assets and liabilities using enacted tax rates expected to
apply to taxable income in the years in which we expect to recover or settle those temporary
differences. We recognize the effect of a change in tax rates on deferred tax assets and liabilities
in the results of operations in the period that includes the enactment date. We reduce the
measurement
of a deferred tax asset, if necessary, by a valuation allowance if it is more likely than not that
we will not realize some or all of the deferred tax asset.
The
Company’s tax positions are subject to income tax audits. We account for uncertain tax
positions by recognizing the financial statement effects of a tax position only when, based upon
technical merits, it is more likely than not that the position will be sustained upon examination.
Significant judgment is required in determining the accounting for income taxes. In the ordinary
course of business, many transactions and calculations arise where the ultimate tax outcome is
uncertain. Our judgments, assumptions and estimates relative to the accounting for income taxes take
into account current tax laws, our interpretation of current tax laws, and possible outcomes of
future audits conducted by foreign and domestic tax authorities. Although we believe that our
estimates are reasonable, the final tax outcome of matters could be different from our assumptions
and estimates used when determining the accounting for income taxes. Such differences, if identified
in future periods, could have a material effect on the amounts recorded in our consolidated
financial statements. Interest and penalties related to unrecognized tax benefits are recognized in
income tax expense in the accompanying consolidated statements of operations. The provision for
income taxes includes the effects of any accruals that the Company believes are appropriate, as well
as any related net interest and penalties.
Payables
to Related Parties Pursuant to the Tax Receivable Agreement
The
Company is party to a Tax Receivable Agreement (“TRA”) with MLSH 1 and MLSH 2. The TRA
provides for the payment by us to MLSH 1 and MLSH 2, collectively, of 85% of the amount of tax benefits, if any, that we actually
realize, or in some circumstances are deemed to realize from exchanges of LLC Units (together with the
corresponding shares of Class B common stock) for Class A common stock, as a result of (i) certain
increases in the tax basis of assets of Topco LLC and its subsidiaries resulting from purchases or
exchanges of LLC Units, (ii) certain tax attributes of the Organization Transactions and (iii) certain
other tax benefits related to our entering into the TRA, including tax benefits attributable to payments
that we make under the TRA (collectively, the “Tax Attributes”). The payment obligations
under the TRA are not conditioned upon any LLC Unitholder maintaining a continued ownership interest in
us or Topco LLC and the rights of MLSH 1 and MLSH 2 under the TRA are assignable. We expect to benefit
from the remaining 15
% of the tax benefits, if any, that we may actually realize.
We
accrue a liability for the payable to related parties for the TRA and a reduction to
stockholders’ equity, when it is deemed probable that the Tax Attributes will be used to
reduce our taxable income, as the contractual percentage of the benefit of Tax Attributes that we
expected to receive over a period of time. The current portion, if any, of the liability is the
amount estimated to be paid within one year of the consolidated balance sheet date. For purposes of
estimating the value of the payable to related parties for the TRA, the tax benefit deemed realized
by us and payable to MLSH 1 and MLSH 2 is computed by taking 85% of the difference of between our undiscounted
forecasted cash income tax liability over the term of benefit of the Tax Attributes and the
forecasted amount of such taxes that we would have been required to pay had there been no Tax
Attributes. The TRA applies to each of our taxable years, beginning with the taxable year that the
TRA is entered into. There is no maximum term for the TRA and the TRA will continue until all such
tax benefits have been utilized or expired unless we exercise our right to terminate the TRA for an
agreed-upon amount equal to the estimated present value of the remaining payments to be made under
the agreement. We may record additional liabilities under the TRA when LLC Units of Topco LLC are
exchanged in the future and as our estimates of the future utilization of the tax benefits change.
If, due to a change in facts, these tax attributes are not utilized in future years, it is
reasonably possible no amounts would be paid under the TRA. In this scenario, the reduction of the
liability under the TRA would result in a benefit to our consolidated statements of operations.
Subsequent adjustments to the payable to related parties for the TRA based on changes in anticipated
future taxable income are recorded in our consolidated statements of operations.
Non-Controlling
Interests
Non-controlling
interests represent
the portion of profit or loss, net assets and comprehensive income or loss of our consolidated
subsidiaries that is not allocable to the Company based on our percentage of ownership of such
entities.
In
November 2020, following the completion of the Organizational Transactions, we became the sole
managing member of Topco LLC. As of December 31, 2024,
we held approximately
56.2
%
of
the outstanding LLC Units of Topco LLC, and MLSH 1 held approximately
43.8%
of the outstanding LLC Units of Topco LLC. Therefore, we report non-controlling interests based on
the percentage of LLC Units of Topco LLC held by MLSH 1 on our consolidated balance sheet as of
December 31, 2024. Income or loss attributed to the non-controlling interest in Topco LLC is
based on the LLC Units outstanding during the period for which the income or loss is generated and
is presented on the consolidated statements of operations and consolidated statements of
comprehensive (loss) income.
MLSH
1 is entitled to exchange LLC Units of TopCo LLC, together with an equal number of shares of our
Class B common stock (together referred to as “Paired Interests”), for shares of our
Class A common stock on a
one-for-one basis or, at our election, for cash, from a substantially
concurrent public offering or private sale (based on the price of our Class A common
stock
in such public offering or private sale). As such, future exchanges of Paired Interests by MLSH 1
will result in a change in ownership and reduce or increase the amount recorded as non-controlling
interests and increase or decrease additional paid-in-capital when Topco LLC has positive or
negative net assets, respectively.
Payments
pursuant to Topco LLC Operating Agreement
The
Topco LLC Operating Agreement entered into at the time of the Organizational Transactions includes a
provision requiring cash distributions enabling its owners, including MLSH 1, to pay their taxes on
income passing through from Topco LLC. Cash distributions of
$0.5 million,
$9.6 million and $150.2 million for tax liabilities were made to MLSH 1 during
the years ended December 31, 2024, 2023 and 2022, respectively.
Segment
Information
The
Company operates in two
reportable segments. Operating segments are defined as components of an enterprise
for which separate financial information is evaluated regularly by the Company’s chief
operating decision maker (“CODM”) in deciding how to allocate resources and assessing
performance. The Company’s CODM, its Chief Executive Officer, allocates resources and assesses
performance based upon discrete financial information at the segment level. All of our long-lived
assets are located in the United States.
Cash
and Cash Equivalents
The
Company considers all highly liquid investments with original maturities of three months or less to
be cash equivalents. The carrying value of these cash equivalents approximates fair value. Cash and
cash equivalents consist of deposits held at financial institutions and money market funds.
Accounts
Receivable and Allowance for Credit Losses
Accounts
receivable primarily consist of amounts due from customers for product sales and services. The
Company’s expected credit losses are developed using an estimated loss rate method that
considers historical collection experience, current conditions, and reasonable and supportable
forecasts that affect the collectability of the reported amount. The estimated loss rates are
applied to trade receivables with similar risk characteristics such as the length of time the
balance has been outstanding, liquidity and financial position of the customer, and the geographic
location of the customer. In certain instances, the Company may identify individual accounts
receivable assets that do not share risk characteristics with other accounts receivable, in which
case the Company records its expected credit losses on an individual asset basis.
The
allowance for credit losses was
$1.2
million and
$1.4
million as of December 31, 2024 and 2023, respectively. Write-offs of accounts receivable were
$
2.0
million during the year ended December 31,
2024.
Write-offs of accounts receivable were
not
significant during the years ended December 31,
2023 and 2022.
Recoveries
were
not
significant
during any of the periods presented.
Inventory
Inventories
consist of raw materials, work-in-process and finished goods. Inventories are stated at the lower of
cost (weighted average cost) or net realizable value. Inventory costs, which relate to the purchase
or production of inventories, include materials, direct labor and manufacturing overhead. The
Company regularly monitors for excess and obsolete inventory based on its estimates of expected
sales volumes, production capacity and expiration of raw materials, work-in-process and finished
products, and reduces the carrying value of inventory accordingly. The Company writes down inventory
that has become obsolete, inventory that has a cost basis in excess of its expected net realizable
value, and inventory in excess of expected manufacturing requirements. Any write-downs of
inventories are charged to cost of revenue.
A
change in the estimated timing or amount of demand for the Company’s products could result in
reduction to the recorded value of inventory quantities on hand. Any significant unanticipated
changes in demand or unexpected quality failures could have a significant impact on the value of
inventory and reported operating results. During all periods presented in the accompanying
consolidated financial statements, there have been no material adjustments related to a revised
estimate of our inventory valuations.
Government
Assistance
The
consideration awarded to the Company by the U.S. Department of Defense is outside the scope of the
contracts with customers, income tax, funded research and development, and contribution guidance.
This is because the awarding entity is not considered to be a customer, the receipt of the funding
is not predicated on the Company’s income tax position, there are no refund provisions, and
the entity is not receiving reciprocal value for their support provided to the Company. The
Company’s
elected
policy is to recognize such assistance as a reduction to the carrying amount of the assets
associated with the award when it is reasonably assured that the funding will be received as
evidenced through the existence of an arrangement, amounts eligible for reimbursement are
determinable and have been incurred or paid, the applicable conditions under the arrangement have
been met, and collectability of amounts due is reasonably assured.
Property
and Equipment
Property and equipment are stated at cost, less
accumulated depreciation.
Depreciation is computed using the straight-line method over the
following estimated useful lives:
|
|
|
|
|
|
|
|
|
| Assets
|
|
Estimated
Useful Life |
|
|
|
|
Leasehold
improvements |
|
12 years
|
| Furniture,
fixtures, equipment and software |
|
3 - 7 years
|
Leasehold
improvements are amortized over the shorter of the related lease term or useful life.
Maintenance
and repairs are charged to operations when incurred, while betterments or renewals are capitalized.
When property and equipment are sold or otherwise disposed of, the asset account and related
accumulated depreciation account are relieved, and any gain or loss is included in the results of
operations.
The
Company records certain government grants earned related to capital projects as a reduction to
property and equipment.
Goodwill
Goodwill
represents the excess of consideration transferred over the estimated fair value of assets acquired
and liabilities assumed in a business combination. Goodwill is not amortized but is reviewed for
impairment. Goodwill is allocated to the Company’s reporting units, which are components of
its business for which discrete cash flow information is available one level below its operating
segment. The Company conducts a goodwill impairment analysis at least annually and more frequently
if changes in facts and circumstances indicate that the fair value of the Company’s reporting
units may be less than their respective carrying amount. In performing each annual impairment
assessment and any interim impairment assessment, the Company determines if it should qualitatively
assess whether it is more likely than not that the fair value of goodwill is less than its carrying
amount (the qualitative impairment test). If it is more likely than not that the fair value of the
reporting unit is less than its carrying amount, or if the Company elects not to perform the
qualitative impairment test, the Company then performs a quantitative impairment test.
The
quantitative impairment test is performed using a one-step process. The process is to compare the
fair value of the reporting unit with its carrying amount. If the fair value of the reporting unit
exceeds its carrying amount, goodwill of the reporting unit is not impaired. If the carrying amount
of the reporting unit exceeds its fair value, goodwill of the reporting unit is impaired and an
impairment loss is recognized in an amount equal to that excess up to the total amount of goodwill
included in the reporting unit. During the third and fourth quarters of 2024, the Company performed
a quantitative impairment test and recorded total goodwill impairment of $166.2 million (see Note 4).
Intangible
Assets
The
Company’s finite-lived intangible assets represent purchased intangible assets and primarily
consist of trade names, customer relationships, patents, and developed technology. Certain criteria
are used in determining whether finite-lived intangible assets acquired in a business combination
must be recognized and reported separately. Finite-lived intangible assets are initially recognized
at fair value, are subject to amortization and are subsequently recorded at amortized cost. The
Company’s finite-lived intangible assets are amortized using a method that reflects the
pattern in which the economic benefits of the intangible assets are intended to be consumed or
otherwise used. If that pattern cannot be reliably determined, the respective intangible assets are
amortized using the straight-line method over their estimated useful lives and are tested for
impairment along with other long-lived assets. Amortization related to patents and developed
technology is allocated to cost of revenue whereas amortization associated with trade names and
customer relationships is allocated to selling, general and administrative expenses.
Impairment
of Long-Lived and Intangible Assets
The
Company periodically reviews long-lived assets, including property and equipment, right-of-use lease
assets and finite-lived intangible assets, to determine whether current events or circumstances may
indicate that such carrying amounts may not be recoverable. If such facts or circumstances are
determined to exist, an estimate of the undiscounted future cash flows of these assets is compared
to the carrying value of the assets to determine whether impairment exists. If the assets are
determined to be
impaired,
the loss is measured based on the difference between the fair value and carrying value of the
respective assets. For the purposes of identifying and measuring impairment, long-lived assets are
grouped with other assets and liabilities at the lowest level for which identifiable cash flows are
largely independent of the cash flows of other assets and liabilities. No impairment loss was
recognized by the Company for any long-lived or intangible assets for any period presented in this
report.
If the Company determines that events and circumstances warrant a revision
to the remaining period of amortization or depreciation for a specific long-lived asset, its
remaining estimated useful life will be revised, and the remaining carrying amount of the long-lived
asset will be depreciated or amortized prospectively over the revised remaining estimated useful
life.
Debt
Issuance Costs
Costs
incurred in connection with obtaining new debt financing are deferred and amortized over the life of
the related financing. If such financing is settled or replaced prior to maturity with debt
instruments that have substantially different terms, the settlement is treated as an extinguishment
and the unamortized costs are charged to gain or loss on extinguishment of debt. If such financing
is settled or replaced with debt instruments from the same lender that do not have substantially
different terms, the new debt agreement is accounted for as a modification for the prior debt
agreement and the unamortized costs remain capitalized, the new original issuance discount costs are
capitalized, and any new third-party costs are charged to expense. Deferred costs are recognized as
a direct reduction in the carrying amount of the debt instrument on the consolidated balance sheets
and are amortized to interest expense over the term of the related debt using the effective interest
method.
Fair
Value of Financial Instruments
The
Company defines fair value as the amount that would be received to sell an asset, or paid to
transfer a liability, in an orderly transaction between market participants at the measurement date.
The Company follows accounting guidance that has a three-level hierarchy for fair value measurements
based upon the transparency of inputs to the valuation of the asset or liability as of the
measurement date. Instruments with readily available actively quoted prices, or for which fair value
can be measured from actively quoted prices in an orderly market, will generally have a higher
degree of market price transparency and a lesser degree of judgment used in measuring fair value.
The three levels of the hierarchy are defined as follows:
Level 1—Observable
inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active
markets;
Level 2—Include
other inputs that are directly or indirectly observable in the marketplace; and
Level 3—Unobservable
inputs which are supported by little or no market activity.
As
of December 31, 2024 and 2023, the fair values of cash and cash equivalents, which consisted
primarily of money market funds, time and demand deposits, trade accounts receivable, net, and trade
accounts payable, approximated their carrying amounts due to the short maturities of these
instruments. As of December 31, 2024 or 2023, the fair value of the Company’s long-term
debt approximated its carrying value, excluding the effect of unamortized debt discount, as it is
based on borrowing rates currently available to the Company for debt with similar terms and
maturities (Level 2 inputs). See Note 5 for the Company’s financial assets and liabilities
that are measured at fair value on a recurring basis.
Acquisitions
The
Company evaluates mergers, acquisitions and other similar transactions to assess whether or not the
transaction should be accounted for as a business combination or an acquisition of assets. The
Company first identifies the acquiring entity by determining if the target is a legal entity or a
group of assets or liabilities. If control over a legal entity is being evaluated, the Company also
evaluates if the target is a variable interest or voting interest entity. For acquisitions of voting
interest entities, the Company applies a screen test to determine if substantially all of the fair
value of the gross assets acquired is concentrated in a single identifiable asset or group of
similar identifiable assets. If the screen test is met, the transaction is accounted for as an
acquisition of assets. If the screen is not met, further determination is required as to whether or
not the Company has acquired inputs and processes that have the ability to create outputs which
would meet the definition of a business.
The
Company accounts for its business combinations using the acquisition method of accounting which
requires that the assets acquired and liabilities assumed of acquired businesses be recorded at
their respective fair values at the date of acquisition. The purchase price, which includes the fair
value of consideration transferred, is attributed to the fair value of the assets acquired and
liabilities assumed. The purchase price may also include contingent consideration. The Company
assesses whether such contingent consideration is subject to liability classification and fair value
measurement or meets the definition of a derivative. Contingent consideration liabilities are
recognized at their estimated fair value on the acquisition date. Contingent consideration
arrangements that are determined to be compensatory in nature are recognized as post combination
expense in our consolidated statements of operations ratably over the implied service period
beginning in the period it becomes probable such amounts will become payable. The excess of the
purchase price of the acquisition over the fair value of the identifiable net assets of the
acquiree
is recorded as goodwill. The fair value of assets acquired and liabilities assumed in certain cases
may be subject to revision based on the final determination of fair value during a period of time
not to exceed twelve months from the acquisition date. The results of acquired businesses are
included in the Company’s consolidated financial statements from the date of acquisition.
Transaction costs directly attributable to acquired businesses are expensed as incurred.
Determining
the fair value of assets acquired and liabilities assumed requires management to use significant
judgment and estimates, including the selection of valuation methodologies and assumptions about
future net cash flows, discount rates and market participants. Each of these factors can
significantly affect the value attributed to the identifiable intangible asset acquired in a
business combination.
Contingent
Consideration
Contingent
consideration represents additional consideration that may be transferred to former owners of an
acquired entity in the future if certain future events occur or conditions are met. Contingent
consideration resulting from the acquisition of a business is recorded at fair value on the
acquisition date. Such contingent consideration is re-measured to its estimated fair value at each
reporting date with the change in fair value recognized within operating expenses in the
Company’s consolidated statements of operations. Subsequent changes in the fair value of the
contingent consideration are classified as a non-cash adjustment to cash flows from operating
activities in the consolidated statements of cash flows because the change in fair value is an input
in determining net (loss) income. Cash paid in settlement of contingent consideration liabilities
are classified as cash flows from financing activities up to the acquisition date fair value with
any excess classified as cash flows from operating activities.
Changes
in the fair value of contingent consideration liabilities associated with the acquisition of a
business can result from updates to assumptions such as the expected timing or probability of
achieving customer-related performance targets, specified sales milestones, changes in projected
revenue or changes in discount rates. Judgment is used in determining those assumptions as of the
acquisition date and for each subsequent reporting period. Therefore, any changes in the fair value
will impact the Company’s results of operations in such reporting period, thereby resulting in
potential variability in the Company’s operating results until such contingencies are
resolved.
Leases
The
Company determines whether the arrangement is or contains a lease based on the unique facts and
circumstances present at the inception of the arrangement and if such a lease is classified as a
finance lease or operating lease. Finance leases with a term greater than one year are included in
property and equipment, current portion of finance lease liabilities, and finance lease liabilities,
less current portion on our consolidated balance sheets. Operating leases with a term greater than
one year are included in other assets, accrued expenses and other current liabilities, and other
long-term liabilities on our consolidated balance sheets. The Company has elected not to recognize
on the consolidated balance sheet leases with terms of one year or less.
Right-of-use
(“ROU”) assets represents the Company’s right to use an underlying asset for the
lease term and lease liabilities represent the Company’s obligation to make lease payments
arising from the lease contract. Lease liabilities and their corresponding ROU assets are recorded
based on the present value of lease payments over the expected lease term. In determining the net
present value of lease payments, the interest rate implicit in lease contracts is typically not
readily determinable. As such, the Company utilizes the appropriate incremental borrowing rate,
which is the rate incurred to borrow on a collateralized basis over a similar term an amount equal
to the lease payments in a similar economic environment. Certain adjustments to the ROU asset may be
required for items such as initial direct costs paid or incentives received and impairment charges
if we determine the ROU asset is impaired.
The
Company considers a lease term to be the noncancelable period that it has the right to use the
underlying asset, including any periods where it is reasonably assured the Company will exercise the
option to extend the contract. Periods covered by an option to extend are included in the lease term
if the lessor controls the exercise of that option.
The
Company recognizes lease expense on a straight-line basis over the expected lease term. Variable
lease payments, for items such as maintenance and utilities, are not included in the calculation of
the ROU asset and the related lease liability and are recognized as this lease expense is
incurred.
The
Company has elected to not separate lease and non-lease components for its leased assets and
accounts for all lease and non-lease components of its agreements as a single lease component. The
lease components resulting in a ROU asset have been recorded on the balance sheet and amortized as
lease expense on a straight-line basis over the lease term.
Concentration
of Credit Risk
Financial instruments that potentially subject the Company to significant
concentrations of credit risk consist principally of cash and accounts receivable. The Company
maintains the majority of its cash balances at multiple financial institutions that management
believes are of high-credit-quality and financially stable. Cash is deposited with major financial
institutions in excess of Federal Deposit Insurance Corporation (“FDIC”) insurance
limits. The Company believes it is not exposed to significant credit risk due to the financial
strength of the depository institutions in which the cash is held. The Company provides credit, in
the normal course of business, to international and domestic distributors as well as certain
customers, which are geographically dispersed. The Company attempts to limit its credit risk by
performing ongoing credit evaluations of its customers and maintaining adequate allowances for
potential credit losses.
The
following table summarizes revenue from each of our customers who individually accounted for 10% or
more of our total revenue or accounts receivable for the periods presented:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
Accounts
Receivable, net |
|
Years
Ended December 31, |
|
As
of December 31, |
|
2024
|
|
2023
|
|
2022
|
|
2024
|
|
2023
|
| Nacalai
USA, Inc. |
20.8
|
%
|
|
19.3
|
%
|
|
*
|
|
36.8
|
%
|
|
27.3
|
%
|
| CureVac
N.V. |
*
|
|
*
|
|
*
|
|
*
|
|
13.0
|
%
|
| BioNTech
SE |
*
|
|
*
|
|
34.8
|
%
|
|
*
|
|
*
|
| Pfizer
Inc. |
*
|
|
*
|
|
26.4
|
%
|
|
*
|
|
*
|
____________________
*Less
than 10%
For
the years ended December 31,
2024 and 2023, all of the revenue recorded for Nacalai USA, Inc. was generated by the Nucleic Acid
Production segment. For
the year ended December 31, 2022, substantially all of the revenue recorded for BioNTech SE and
Pfizer Inc. was generated by our Nucleic Acid Production segment.
Net
(Loss) Income per Class A Common Share Attributable to Maravai LifeSciences Holdings, Inc.
Basic
net (loss) income per Class A common share attributable to Maravai LifeSciences Holdings, Inc. is
computed by dividing net (loss) income attributable to us by the weighted average number of Class A
common shares outstanding during the period. Diluted net income per Class A common share is
calculated by giving effect to all potential weighted average dilutive stock options, restricted
stock units, performance stock units and Topco LLC Units, that together with an equal number of
shares of our Class B common stock are convertible into shares of our Class A common stock. The
dilutive effect of outstanding awards, if any, is reflected in diluted earnings per share by
application of the treasury stock method or if-converted method, as applicable. In periods in which
the Company reports a net loss attributable to Maravai LifeSciences Holdings, Inc., diluted net loss
per Class A common share attributable to the Company is the same as basic net loss per Class A
common share attributable to the Company, since dilutive equity instruments are not assumed to have
been issued if their effect is anti-dilutive. The Company reported a net loss attributable to
Maravai LifeSciences Holdings, Inc. for the years ended December 31, 2024 and
2023.
Recently
Adopted Accounting Pronouncements
In
November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting
Standards Update (“ASU”) 2023-07, Segment
Reporting (Topic 280) - Improvements to Reportable Segment Disclosures (“ASU
2023-07”), which improves segment disclosure requirements, primarily through enhanced
disclosures about significant expenses. ASU 2023-07 requires disclosures to include significant
segment expenses that are regularly provided to the CODM and included within each reported measure
of segment profit or loss, an amount for other segment items by reportable segment and a description
of its composition, any additional measures of a segment’s profit or loss used by the CODM
when deciding how to allocate resources, and the title and position of the CODM and an explanation
of how the CODM uses the reported measures of segment profit or loss in assessing segment
performance and deciding how to allocate resources. The ASU also requires all annual disclosures
currently required by Topic 280 to be included in interim periods. ASU 2023-07 is effective for the
Company for fiscal years beginning after December 15, 2023, and interim periods within fiscal years
beginning after December 15, 2024, with early adoption permitted. The amendments in this ASU should
be applied retrospectively to all prior periods presented in the consolidated financial statements.
The Company adopted ASU 2023-07 during the year ended December 31, 2024 and is complying with
the related disclosure requirements (see Note 17).
Recently
Issued Accounting Pronouncements Not Yet Adopted
In
December 2023, the FASB issued ASU 2023-09, Income
Taxes (Topic 740) - Improvements to Income Tax Disclosures (“ASU
2023-09”). The amendments in this ASU address investor requests for more transparency about
income tax information through improvements to tax disclosures primarily related to the rate
reconciliation and income taxes paid information. The ASU also includes certain other amendments to
improve the effectiveness of income tax disclosures. ASU 2023-09 is effective for the Company for
annual periods beginning after December 15, 2024, with early adoption permitted. The amendments in
this ASU should be applied on a prospective basis, with retrospective application permitted. The
Company is currently evaluating the impact of adopting this standard on its consolidated financial
statements and disclosures.
In
November 2024, the FASB issued ASU 2024-03, Income
Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40) -
Disaggregation of Income Statement Expenses (“ASU
2024-03”). The amendments in this ASU improve disclosures about a public business
entity’s expenses and addresses investor requests for more detailed information about certain
types of expenses in commonly presented expense captions. ASU 2024-03 requires disclosure of
purchase of inventory, employee compensation, depreciation, and intangible asset amortization
included in each relevant expense caption. The ASU also requires to include certain amounts that are
already required to be disclosed under U.S. GAAP in the same disclosure as the other disaggregation
requirements, disclosure of a qualitative description of the amounts remaining in relevant expense
captions that are not separately disaggregated quantitatively, and disclosure of the total amount of
selling expenses and, in annual reporting periods, an entity's definition of selling expenses. ASU
2024-03 is effective for the Company for annual periods beginning after December 15, 2026, and
interim periods within fiscal years beginning after December 15, 2027, with early adoption
permitted. The amendments in this ASU should be applied on a prospective basis, with retrospective
application permitted. The Company is currently evaluating the impact of adopting this standard on
its consolidated financial statements and disclosures.
2.
Acquisitions
Alphazyme,
LLC
On
January 18, 2023, the Company completed the acquisition of Alphazyme, LLC (“Alphazyme”), a
privately-held original equipment manufacturer (“OEM”) and provider of custom, scalable,
molecular biology enzymes to customers in the genetic analysis and nucleic acid synthesis markets. The
acquisition will expand the Company’s internal enzyme product portfolio and increase the
Company’s differentiated mRNA manufacturing services and product offerings. Alphazyme’s
ability to manufacture custom enzymes allows the Company to expand into near adjacent markets and raise
our enzyme vertical.
The
Company acquired Alphazyme for a total purchase consideration of $75.3 million, which is inclusive of net working capital
adjustments. As a result of the acquisition, the Company owns all the outstanding equity interest in
Alphazyme. The total cash consideration was paid using existing cash on hand. The transaction was
accounted for as an acquisition of a business as Alphazyme consisted of inputs and processes applied to
those inputs that had the ability to contribute to the creation of outputs.
For
the year ended December 31, 2023, the Company incurred $4.1
million in transaction costs associated with the acquisition of Alphazyme, which were
recorded within selling, general and administrative expenses in the consolidated statements of
operations.
The
acquisition date fair value of consideration transferred to acquire Alphazyme consisted of the
following (in thousands):
|
|
|
|
|
|
|
Cash
paid (1)
|
$
|
70,037
|
|
| Fair
value of contingent consideration |
5,289
|
|
|
Total
consideration transferred |
$
|
75,326
|
|
____________________
(1)Represents
cash consideration paid at closing of $70.1 million, net of a purchase price adjustment
received in June 2023 of $0.1 million.
Pursuant
to the Securities Purchase Agreement (the “Alphazyme SPA”) between the Company and sellers
of Alphazyme, additional payments to the sellers of Alphazyme are dependent upon meeting or exceeding
defined revenue targets during fiscal years 2023 through 2025 (the “Alphazyme Performance
Payments”). The Alphazyme SPA provides for a total maximum Alphazyme Performance Payments of $
75.0
million. The Alphazyme Performance Payments were recorded as contingent consideration
and was included as part of the purchase consideration. The Company estimated the fair value of the
Alphazyme Performance Payments contingent consideration based on a Monte-Carlo simulation model which
utilized an income approach. The estimated fair value was based on Alphazyme revenue projections,
expected payout term, volatility and risk adjusted discount rates which are Level 3 inputs (see Note 5).
The first and second performance periods applicable to the Alphazyme
Performance
Payments ended on December 31, 2023 and 2024, respectively, and it was determined that the defined
revenue targets were not achieved. Consequently,
no
payments were made to the sellers of Alphazyme. As of December 31, 2024, the
Company may be required to make contingent payments to the sellers of Alphazyme of up to $
25.0
million for the remaining performance period. The Company did not record a corresponding liability as of December 31, 2024 as
payments are not deemed probable.
The
Alphazyme SPA also provides that the Company will pay certain employees of Alphazyme an additional
amount totaling $9.3
million (the “Alphazyme Retention Payments”) as of various dates but
primarily through December 31, 2025 as long as these individuals continue to be employed by the Company.
The Company considers the payment of the Alphazyme Retention Payments as probable and is recognizing
compensation expense related to these payments in the post-acquisition period ratably over the service
period of approximately three years. As of December 31, 2024,
the Company has accrued $6.6
million of these retention payments within other long-term liabilities on the
consolidated balance sheets. For the year ended December 31, 2024, the Company recorded $
1.1 million of compensation expense related to the Alphazyme Retention
Payments within cost of revenue in the consolidated statements of operations. For the year ended
December 31, 2023, such amount was not material. For each of the years ended December 31, 2024
and 2023, the Company recorded $
2.2
million of compensation expense related to the Alphazyme Retention Payments within
selling, general and administrative expenses in the consolidated statements of operations.
The
following table summarizes the estimated fair values of the assets acquired and liabilities assumed
at the acquisition date (in thousands):
|
|
|
|
|
|
| Cash
|
$
|
288
|
|
| Inventory
|
7,246
|
|
| Other
current assets |
660
|
|
| Intangible
assets, net |
31,680
|
|
| Other
assets |
5,043
|
|
|
Total
identifiable assets acquired |
44,917
|
|
| Current
liabilities |
(
482) |
|
| Other
long-term liabilities |
(
11,470)
|
|
|
Total
liabilities assumed |
(
11,952)
|
|
| Net
identifiable assets acquired |
32,965
|
|
| Goodwill
|
42,361
|
|
| Net
assets acquired |
$
|
75,326
|
|
We
recorded the preliminary purchase price allocation in the first quarter of 2023. During the third
quarter of 2023, we recorded a measurement period adjustment resulting in a decrease to goodwill of $
0.4
million, with an equal offset to other long-term liabilities.
The
acquisition was accounted for under the acquisition method of accounting, and therefore, the total
purchase price was allocated to the identifiable tangible and intangible assets acquired and the
liabilities assumed based on their respective fair values as of the acquisition date. Purchase
consideration in excess of the amounts recognized for the net assets acquired was recognized as
goodwill. Goodwill is primarily attributable to expanded synergies expected from the acquisition
associated with a vertical supply integration. All of the goodwill acquired in connection with the
acquisition of Alphazyme was allocated to the Company’s Nucleic Acid Production segment.
None of the goodwill recognized is
expected to be deductible for income tax purposes.
Upon
closing of the acquisition, approximately $1.5 million was
placed into escrow to cover potential working capital adjustments and approximately $3.0
million was placed into escrow to secure certain representations and warranties
pursuant to the terms of the Alphazyme SPA. These amounts are included in the total purchase
consideration of $75.3
million. $1.5 million was released
from escrow during the second quarter of 2023, of which the Company received $0.1
million related to net working capital adjustments. $3.0
million was released from escrow to the sellers during the first quarter of
2024.
The
following table summarizes the estimated fair values of Alphazyme’s identifiable intangible
assets as of the date of acquisition and their estimated useful lives:
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated
Fair Value (in thousands) |
|
Estimated
Useful Life (in years) |
| Trade
names |
$
|
220
|
|
|
5
|
| Developed
technology |
31,000
|
|
|
12
|
| Customer
relationships |
460
|
|
|
12
|
|
Total
|
$
|
31,680
|
|
|
|
The
trade name and customer relationship intangible assets are related to Alphazyme’s name, customer
loyalty and customer relationships. The developed technology intangible asset is related to its unique
manufacturing process optimization capability to both scale production and achieve quality standards.
The fair value of these intangible assets was based on Alphazyme’s projected revenues and was
estimated using an income approach, specifically the relief from royalty method for trade names, the
multi-period excess earnings method for developed technology, and the distributor method for customer
relationships. Under the income approach, an intangible asset’s fair value is equal to the present
value of future economic benefits to be derived from ownership of the asset. The estimated fair value
was developed by discounting future net cash flows to their present value at market-based rates of
return utilizing Level 3 inputs. The useful lives for these intangible assets were determined based upon
the remaining period for which the assets were expected to contribute directly or indirectly to future
cash flows. Key quantitative assumptions used in the determination of fair value of the developed
technology intangible included revenue growth rates ranging from 3.0% to
55.0%, a discount rate of
17.8% and an assumed technical obsolescent curve of 5.0
%.
The
carrying value of the remaining assets acquired or liabilities assumed was estimated to equal their fair
values based on their short-term nature.
MyChem,
LLC
On
January 27, 2022, the Company completed the acquisition of MyChem, LLC (“MyChem”), a
privately-held San Diego, California-based provider of ultra-pure nucleotides to customers in the
diagnostics, pharma, genomics and research markets. The acquisition will vertically integrate the
Company’s supply chain and expand its product offerings for inputs used in the development of
therapeutics and vaccines.
The
Company acquired MyChem for a total purchase consideration of $257.9 million, which is inclusive of net working capital
adjustments. As a result of the acquisition, the Company owns all the outstanding equity interest in
MyChem. The total cash consideration was paid using existing cash on hand. The transaction was accounted
for as an acquisition of a business as MyChem consisted of inputs and processes applied to those inputs
that had the ability to contribute to the creation of outputs.
For
the year ended December 31, 2022, the Company incurred $3.5
million in transaction costs associated with the acquisition of MyChem, which were
recorded within selling, general and administrative expenses in the consolidated statements of
operations.
The
acquisition date fair value of consideration transferred to acquire MyChem consisted of the
following (in thousands):
|
|
|
|
|
|
|
Cash
paid (1)
|
$
|
240,145
|
|
| Consideration
payable |
10,000
|
|
| Fair
value of contingent consideration |
7,800
|
|
|
Total
consideration transferred |
$
|
257,945
|
|
____________________
(1)Represents
cash consideration paid at closing of $240.0
million and a purchase price adjustment paid in November 2022 of $0.1 million.
Pursuant
to the Securities Purchase Agreement (the “MyChem SPA”) between the Company and sellers of
MyChem, additional payments to the sellers of MyChem are dependent upon meeting or exceeding defined
revenue targets during fiscal 2022 (the “MyChem Performance Payment”). The MyChem SPA
provides for a total maximum Performance Payment of $40.0 million. The MyChem Performance Payment was recorded as contingent
consideration and was included as part of the purchase consideration. The Company estimated the fair
value of the MyChem Performance Payment contingent consideration based on a Monte-Carlo simulation model
which utilized an income approach. The estimated fair value was based on MyChem revenue projections,
expected payout term, volatility and risk adjusted discount rates which are Level 3 inputs (see Note 5).
The
performance
period applicable to the MyChem Performance Payment ended as of December 31, 2022 and it was determined
that none of the defined revenue thresholds were achieved. Consequently, no payment was made to the sellers of MyChem.
The
MyChem SPA also provides that the Company will pay to the sellers of MyChem an additional $
20.0
million (the “MyChem Retention Payment”) as of the second anniversary of
the closing of the acquisition date as long as two senior employees who are also
the sellers of MyChem continue to be employed by TriLink. The Company considers the payment of the
Retention Payment as probable and is recognizing compensation expense related to this payment in the
post-acquisition period ratably over the expected service period of two years. For the years ended
December 31, 2024 and 2023, the Company recorded $1.4 million and $
4.3 million, respectively,
of compensation expense related to the MyChem Retention Payment within cost of revenue in the
consolidated statements of operations. For the year ended December 31, 2022, there was
no such amount. For the years ended
December 31, 2024, 2023, and 2022, the Company recorded $0.4 million, $
5.1 million, and $9.3 million, respectively, of compensation expense related to
the MyChem Retention Payment within research and development expenses in the consolidated statements of
operations. As of December 31, 2024, there will be no further expense or payments under this
arrangement.
The
MyChem SPA further provides that the Company will pay to the sellers of MyChem an additional amount of
up to $10.0
million subject to the completion of certain calculations associated with acquired
inventory, which has been recorded within accrued expenses and other current liabilities on the
consolidated balance sheet as of December 31, 2022. During the first quarter of 2023, but subsequent to
the end of the measurement period, these calculations were completed and a payment of $9.7 million was made by the Company to the sellers. The
remaining $0.3 million
was recorded as non-cash gain within current year operations.
The
following table summarizes the estimated fair values of the assets acquired and liabilities assumed
at the acquisition date (in thousands):
|
|
|
|
|
|
| Cash
|
$
|
1,176
|
|
| Current
assets |
2,741
|
|
| Intangible
assets, net |
123,360
|
|
| Other
assets |
8,585
|
|
|
Total
identifiable assets acquired |
135,862
|
|
| Current
liabilities |
(
420) |
|
| Other
long-term liabilities |
(
8,399)
|
|
|
Total
liabilities assumed |
(
8,819)
|
|
| Net
identifiable assets acquired |
127,043
|
|
| Goodwill
|
130,902
|
|
| Net
assets acquired |
$
|
257,945
|
|
We
recorded the preliminary purchase price allocation in the first quarter of 2022. During the fourth
quarter of 2022, we recorded measurement period adjustments resulting in an increase to goodwill of $
0.1
million and a decrease to other assets and current liabilities of $
0.7
million.
The
acquisition was accounted for under the acquisition method of accounting, and therefore, the total
purchase price was allocated to the identifiable tangible and intangible assets acquired and the
liabilities assumed based on their respective fair values as of the acquisition date. Purchase
consideration in excess of the amounts recognized for the net assets acquired was recognized as
goodwill. Goodwill is primarily attributable to expanded synergies expected from the acquisition
associated with a vertical supply integration. There were no tax impacts associated with the acquisition
due to the pass-through income tax treatment of MyChem. All of the goodwill acquired in connection with
the acquisition of MyChem was allocated to the Company’s Nucleic Acid Production segment and is
deductible to Topco LLC for income tax purposes.
Upon
closing of the acquisition, approximately $1.0 million was
placed into escrow to cover potential working capital adjustments and approximately $
12.5 million was placed into escrow to secure certain representations and
warranties pursuant to the terms of the MyChem SPA. These amounts are included in the total purchase
consideration of $257.9
million. The Company released the $1.0 million in
escrow and paid out an additional $0.1 million
related to net working capital adjustments during the fourth quarter of 2022. During the first quarter
of 2023, but subsequent to the end of the measurement period, $12.4 million of the amounts in escrow to secure certain representations
and warranties was released to the sellers and the remaining $0.1 million was released to the Company for indemnification of
pre-closing liabilities, which was recorded within current year operations.
The
following table summarizes the estimated fair values of MyChem’s identifiable intangible
assets as of the date of acquisition and their estimated useful lives:
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated
Fair Value (in thousands) |
|
Estimated
Useful Life (in years) |
| Trade
names |
$
|
460
|
|
|
3
|
| Developed
technology |
121,000
|
|
|
12
|
| Customer
relationships |
1,900
|
|
|
12
|
|
Total
|
$
|
123,360
|
|
|
|
The
trade name and customer relationship intangible assets are related to MyChem’s name, customer
loyalty and customer relationships. The developed technology intangible asset is related to processes
and techniques for synthesizing and developing ultra-pure nucleotides. The fair value of these
intangible assets was based on MyChem’s projected revenues and was estimated using an income
approach, specifically the multi-period excess earnings method. Under the income approach, an intangible
asset’s fair value is equal to the present value of future economic benefits to be derived from
ownership of the asset. The estimated fair value was developed by discounting future net cash flows to
their present value at market-based rates of return utilizing Level 3 inputs. The useful lives for these
intangible assets were determined based upon the remaining period for which the assets were expected to
contribute directly or indirectly to future cash flows. Key quantitative assumptions used in the
determination of fair value of the developed technology intangible included revenue growth rates ranging
from 3.0
% to 30.6
%, a discount rate of 16.5
% and an assumed technical obsolescent curve range of 5.0% to
7.5%.
Pursuant
to the terms of the MyChem SPA, the Company recognized an indemnification asset of $8.0 million within other assets, which represented the seller’s
obligation to reimburse pre-acquisition income tax liabilities assumed in the acquisition and was
recorded within other long-term liabilities. The amount of the indemnification asset recorded as of
December 31, 2024 was $4.1
million.
The
carrying value of the remaining assets acquired or liabilities assumed was estimated to equal their fair
values based on their short-term nature.
3.
Restructuring
In
November 2023, the Company implemented a cost realignment plan (the “Cost Realignment Plan”)
that included the termination of approximately 15% of the Company’s workforce, the termination of
certain leases, and other actions to reduce expenses, all as part of a plan to optimize business
operations and match them to current market conditions. The reduction in force was completed on January
5, 2024, following the end of the sixty-day notification period required by the Worker Adjustment and
Retraining Notification Act. The Cost Realignment Plan was substantially completed during the first
quarter of 2024, with most of the cash payments having been disbursed prior to the end of such quarter,
and the remainder having been disbursed prior to December 31, 2024. The Company does not expect to
incur additional restructuring costs relating to the Cost Realignment Plan.
For
the year ended December 31, 2024, restructuring charges primarily consist of the stock-based
compensation benefit recognized for the forfeiture of stock awards upon the termination of certain
impacted employees resulting from the Cost
Realignment
Plan. The Company’s restructuring charges by segment
and unallocated corporate costs, which are recorded as restructuring expenses on the consolidated
statements of operations, were as follows for the periods presented (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year
Ended December 31, 2024 |
|
Severance
and Other Employee Costs (Reversals) |
|
Stock-Based
Compensation Benefit |
|
Professional
Fee Reversals and Other |
|
Total
|
|
Nucleic
Acid Production
|
$
|
(
11) |
|
|
$
|
(
813
) |
|
|
$
|
(
20
) |
|
|
$
|
(
844
) |
|
|
Corporate
|
56
|
|
|
(
412
) |
|
|
(
14
) |
|
|
(
370
) |
|
|
Total
|
$
|
45
|
|
|
$
|
(
1,225) |
|
|
$
|
(
34
) |
|
|
$
|
(
1,214) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year
Ended December 31, 2023 |
|
Severance
and Other Employee Costs
|
|
Stock-Based
Compensation Expense (Benefit)
|
|
Facility
and Other Exit Costs
|
|
Professional
Fees and Other
|
|
Total
|
|
Nucleic
Acid Production
|
$
|
2,470
|
|
|
$
|
168
|
|
|
$
|
638
|
|
|
$
|
190
|
|
|
$
|
3,466
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate
|
1,833
|
|
|
(
269
) |
|
|
1,351
|
|
|
85
|
|
|
3,000
|
|
|
Total
|
$
|
4,303
|
|
|
$
|
(
101
) |
|
|
$
|
1,989
|
|
|
$
|
275
|
|
|
$
|
6,466
|
|
The
following table summarizes the activity for accrued restructuring costs, which is recorded within
accrued expenses and other current liabilities on the consolidated balance sheets, for the periods
presented (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance
and Other Employee Costs
|
|
Stock-Based
Compensation Benefit
|
|
Facility
and Other Exit Costs
|
|
Professional
Fees (Reversals) and Other
|
|
Total
|
| Balance
as of December 31, 2022 |
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Charges
(benefit) |
4,303
|
|
|
(
101
) |
|
|
1,989
|
|
|
275
|
|
|
6,466
|
|
|
Non-cash
benefit |
—
|
|
|
101
|
|
|
—
|
|
|
—
|
|
|
101
|
|
|
Cash
payments
|
(
1,760) |
|
|
—
|
|
|
(
1,989) |
|
|
(
4
) |
|
|
(
3,753) |
|
| Balance
as of December 31, 2023 |
2,543
|
|
|
—
|
|
|
—
|
|
|
271
|
|
|
2,814
|
|
|
Charges
(benefit) |
45
|
|
|
(
1,225) |
|
|
—
|
|
|
(
34)
|
|
|
(
1,214) |
|
|
Non-cash
benefit |
—
|
|
|
1,225
|
|
|
—
|
|
|
—
|
|
|
1,225
|
|
|
Cash
payments |
(
2,588) |
|
|
—
|
|
|
—
|
|
|
(
237
) |
|
|
(
2,825) |
|
| Balance
as of December 31, 2024 |
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
4.
Goodwill
and Intangible Assets
Goodwill
The
following table summarizes the activity in the Company’s goodwill by segment for the period
presented (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nucleic Acid
Production (1)
|
|
Biologics
Safety Testing (2)
|
|
Total
|
| Balance
as of December 31, 2023 |
$
|
206,101
|
|
|
$
|
119,928
|
|
|
$
|
326,029
|
|
|
|
|
|
|
|
|
Impairment
|
(
166,151) |
|
|
—
|
|
|
(
166,151) |
|
| Balance
as of December 31, 2024 |
$
|
39,950
|
|
|
$
|
119,928
|
|
|
$
|
159,878
|
|
____________________
(1)The
Nucleic Acid Production segment had accumulated goodwill impairment of $166.2
million as of December 31, 2024. There had been no accumulated goodwill impairment
as of December 31, 2023.
(2)The
Biologics Safety Testing segment had
no
accumulated goodwill impairment as of December 31, 2024 or 2023.
As
of December 31, 2024 and 2023, the Company had
four
reporting units,
three
of which are contained in the Nucleic Acid Production segment. During the year ended
December 31, 2024, the Company recorded full goodwill impairment of $154.2
million
related to the TriLink reporting unit and a goodwill impairment of $11.9
million related to the Alphazyme reporting unit, which are both contained in the
Nucleic Acid Production segment.
In
connection with preparing its financial statements for the third quarter of 2024, the Company tested its
reporting units for potential goodwill impairment in response to impairment indicators identified during
the Company’s forecasting process. During the third quarter of 2024, the Company revised its
long-term forecast to reflect lower projected near-term revenues due to lower demand in research and
discovery products within our Nucleic Acid Production business. This revision also considered the slower
than expected transition to new mRNA clinical trials as customers prioritize existing programs and more
conservatively invest in new programs as the results of continued macroeconomic pressures. The Company
performed a quantitative goodwill impairment test on each of its four reporting units. The Company
performed the impairment test using a combination of the income and the market approach to determine
whether the fair value of each reporting unit was less than its carrying value. The income approach
utilizes a discounted cash flow model with inputs developed using both internal and market-based data,
while the market approach utilizes comparable company information. The significant assumptions in the
discounted cash flow models vary amongst, and are specific to, each reporting unit and include, but are
not limited to, discount rates, revenue projections, revenue growth rate assumptions (including terminal
growth rates) and EBITDA margins. Discount rates were determined using a weighted average cost of
capital specific to each reporting unit and other market and industry data. For TriLink, the selected
discount rate was 10.5%.
These assumptions were developed in light of current market conditions and future expectations which
include, but were not limited to, new product and service developments, impact of competition and future
economic conditions. These estimates and assumptions represent a Level 3 measurement because they are
supported by little or no market activity and reflect our own assumptions in measuring fair value. Based
on its interim quantitative assessment, the Company concluded that the TriLink reporting unit had a
carrying value that exceeded its estimated fair value. As a result, the Company recorded goodwill
impairment of $154.2 million on the
consolidated statements of operations, which was the entire goodwill balance at the reporting unit. As
of the end of the third quarter of 2024, no
impairment was recorded for the Company’s remaining three reporting units, as each of
their fair values exceeded their respective carrying values.
In
connection with preparing its financial statements for the year ended December 31, 2024, the
Company tested its reporting units for potential goodwill impairment in response to impairment
indicators identified during the Company’s forecast process and the sustained decline in its stock
price. As of December 31, 2024, the Company revised its long-term forecast to reflect lower
projected near-term revenues due to lower demand in enzyme products within its Nucleic Acid Production
business. The Company performed a quantitative goodwill impairment test on each of its reporting units
with goodwill. The Company performed the December 31, 2024 impairment test using a combination of
the income and the market approach to determine whether the fair value of each reporting unit was less
than its carrying value. The income approach utilizes a discounted cash flow model with inputs developed
using both internal and market-based data, while the market approach utilizes comparable company
information. The significant assumptions in the discounted cash flow models vary amongst, and are
specific to, each reporting unit and include, but are not limited to, discount rates, revenue, revenue
growth rate assumptions (including terminal growth rates) and EBITDA margin. Discount rates were
determined using a weighted average cost of capital specific to each reporting unit and other market and
industry data. For Alphazyme, the selected discount rate was 28.5%. These assumptions were developed in light of current market
conditions and future expectations which include, but were not limited to, new product and service
developments, the impact of competition and future economic conditions. These estimates and assumptions
represent a Level 3 measurement because they are supported by little or no market activity and reflect
the Company’s own assumptions in measuring fair value. Based on its quantitative assessment, the
Company concluded that the Alphazyme reporting unit had a carrying value that exceeded its estimated
fair value. As a result, the Company recorded goodwill impairment of $11.9
million on the consolidated statements of operations. No impairment was recorded for any of the Company’s
other reporting units with goodwill at this time, as each of their fair values exceeded their respective
carrying values.
Intangible
Assets
In
conjunction with the goodwill impairment tests performed during each of the third and fourth quarters of
2024, the Company also evaluated the recoverability of its long-lived assets (including finite-lived
intangible assets). The Company performed the impairment test by comparing the respective carrying value
of the assets to the current and expected future cash flows, on an undiscounted basis, to be generated
from such assets. Based on the impairment tests, it was determined that the carrying value of the asset
groups did not exceed their respective current and expected future cash flows, on an undiscounted basis.
As a result, no
impairment for long-lived assets (including finite-lived intangible assets) was
recorded.
Intangible
assets are being amortized on a straight-line basis, which reflects the expected pattern in which the
economic benefits of the intangible assets are being obtained, over an estimated useful life ranging
from 3 to 14
years.
The
following are components of finite-lived intangible assets and accumulated amortization as of the
periods presented (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December
31, 2024 |
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
|
Net Carrying Amount
|
|
Estimated Useful Life
|
|
Weighted Average Remaining Amortization Period
|
|
|
|
(in thousands)
|
|
|
|
(in
years) |
|
(in
years) |
| Trade
Names |
$
|
7,800
|
|
|
$
|
(
6,885)
|
|
|
$
|
915
|
|
|
3 - 10
|
|
2.0
|
| Patents
and Developed Technology |
321,149
|
|
|
(
134,822)
|
|
|
186,327
|
|
|
10 - 14
|
|
8.0
|
| Customer
Relationships |
22,313
|
|
|
(
14,598)
|
|
|
7,715
|
|
|
10 - 12
|
|
5.2
|
| Total
|
$
|
351,262
|
|
|
$
|
(
156,305)
|
|
|
$
|
194,957
|
|
|
|
|
7.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December
31, 2023 |
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net
Carrying
Amount
|
|
Estimated
Useful
Life
|
|
Weighted
Average
Remaining
Amortization
Period
|
|
|
|
(in thousands)
|
|
|
|
(in
years) |
|
(in
years) |
| Trade
Names |
$
|
7,800
|
|
|
$
|
(
6,369)
|
|
|
$
|
1,431
|
|
|
3 - 10
|
|
2.8
|
| Patents
and Developed Technology |
319,649
|
|
|
(
109,800)
|
|
|
209,849
|
|
|
10 - 14
|
|
8.9
|
| Customer
Relationships |
22,313
|
|
|
(
12,606)
|
|
|
9,707
|
|
|
10 - 12
|
|
5.9
|
| Total
|
$
|
349,762
|
|
|
$
|
(
128,775)
|
|
|
$
|
220,987
|
|
|
|
|
8.7
|
The
Company recognized $
24.9
million,
$24.8 million and
$21.5 million of
amortization expense from intangible assets directly linked with revenue generating activities within
cost of revenue in the consolidated statements of operations for the years ended December 31, 2024,
2023 and 2022, respectively. Amortization expense for intangible assets that are not directly related to
sales generating activities of
$2.6
million,
$2.6 million and
$2.8 million was
recorded as selling, general and administrative expenses for the years ended December 31, 2024,
2023 and 2022, respectively.
As
of December 31, 2024, the estimated future amortization expense for finite-lived intangible
assets were as follows (in thousands):
|
|
|
|
|
|
| 2025
|
$
|
27,460
|
|
| 2026
|
27,223
|
|
| 2027
|
26,207
|
|
| 2028
|
25,987
|
|
| 2029
|
24,822
|
|
| Thereafter
|
63,258
|
|
|
Total
estimated amortization expense |
$
|
194,957
|
|
5.
Fair
Value Measurements
The
following table summarizes the Company’s financial assets and liabilities that are measured at
fair value on a recurring basis by level within the fair value hierarchy as of the periods presented
(in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair
Value Measurements as of December 31, 2024 |
|
Line
Item in the Consolidated Balance Sheets |
|
Level
1 |
|
Level
2 |
|
Level
3 |
|
Total
|
| Assets
|
|
|
|
|
|
|
|
|
|
|
Money
market funds
|
Cash
and cash equivalents
|
|
$
|
321,985
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
321,985
|
|
|
Interest
rate cap |
Prepaid
expenses and other current assets |
|
—
|
|
|
1,375
|
|
|
—
|
|
|
1,375
|
|
|
Total
assets |
|
|
$
|
321,985
|
|
|
$
|
1,375
|
|
|
$
|
—
|
|
|
$
|
323,360
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair
Value Measurements as of December 31, 2023 |
|
Line
Item in the Consolidated Balance Sheets |
|
Level
1 |
|
Level
2 |
|
Level
3 |
|
Total
|
| Assets
|
|
|
|
|
|
|
|
|
|
|
Money
market funds
|
Cash
and cash equivalents
|
|
$
|
418,685
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
418,685
|
|
|
Interest
rate cap |
Other
assets
|
|
—
|
|
|
8,559
|
|
|
—
|
|
|
8,559
|
|
|
Total
assets |
|
|
$
|
418,685
|
|
|
$
|
8,559
|
|
|
$
|
—
|
|
|
$
|
427,244
|
|
|
|
|
|
|
|
|
|
|
|
| Liabilities
|
|
|
|
|
|
|
|
|
|
|
Contingent
consideration
|
Accrued
expenses and other current liabilities |
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
131
|
|
|
$
|
131
|
|
|
Contingent
consideration
|
Other
long-term liabilities |
|
—
|
|
|
—
|
|
|
1,872
|
|
|
1,872
|
|
|
Total
liabilities |
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,003
|
|
|
$
|
2,003
|
|
Contingent
Consideration
In
connection with the acquisition of Alphazyme (see Note 2), the Company was initially required to make
contingent payments to the sellers of Alphazyme of up to $75.0 million, subject to Alphazyme achieving certain revenue
thresholds during each of the fiscal years 2023 through 2025. The preliminary fair value of the
liability for the contingent consideration recognized upon the completion of the acquisition as part of
the purchase accounting opening balance sheet was $5.3 million. The preliminary fair value of the contingent
consideration was determined using a Monte-Carlo simulation-based model discounted to present value.
Assumptions used to determine the fair value were expected revenue, a discount rate of 17.8% and various probability factors. The ultimate settlement of the
contingent consideration could deviate from current estimates based on actual revenues. The contingent
consideration consists of three Performance Payments for each of the performance
periods, with the first and second payments (to the extent earned) due in 2024 and 2025, respectively.
For the first and second performance periods which ended on December 31, 2023 and 2024, respectively, it
was determined that the defined revenue targets were not achieved. Consequently,
no
payments for contingent consideration were made to the sellers of Alphazyme. As of
December 31, 2024, the Company may be required to make contingent payments to the sellers of
Alphazyme of up to $25.0
million for the remaining performance period.
This
contingent consideration liability is considered to be a Level 3 financial liability that is remeasured
each reporting period. Changes in fair value of contingent consideration are recognized as a gain or
loss and recorded within change in estimated fair value of contingent consideration in the consolidated
statements of operations. During the year ended December 31, 2024, the Company recorded a decrease
of $
2.0 million in
the estimated fair value of contingent consideration. This was due to a change in estimates associated
with the expected achievement of the Alphazyme revenue thresholds that would require the Company to make
a contingent consideration payment under the Alphazyme SPA.
The
following table provides a reconciliation of liabilities measured at fair value on a recurring basis
using significant unobservable inputs (Level 3) for the period presented (in thousands):
|
|
|
|
|
|
|
Contingent
Consideration |
| Balance
as of December 31, 2023 |
$
|
2,003
|
|
|
Change
in estimated fair value of contingent consideration |
(
2,003)
|
|
| Balance
as of December 31, 2024 |
$
|
—
|
|
6.
Balance
Sheet Components
Inventory
Inventory
consisted of the following as of the periods presented (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
December
31, 2024 |
|
December
31, 2023 |
| Raw
materials |
$
|
16,974
|
|
|
$
|
19,338
|
|
| Work-in-process
|
10,050
|
|
|
12,680
|
|
| Finished
goods |
23,058
|
|
|
19,379
|
|
|
Total
inventory |
$
|
50,082
|
|
|
$
|
51,397
|
|
Property
and equipment
Property
and equipment consisted
of the following as of the periods presented
(in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
December
31, 2024 |
|
December
31, 2023 |
|
Finance
lease right-of-use assets
|
$
|
78,599
|
|
|
$
|
78,599
|
|
| Leasehold
improvements |
37,587
|
|
|
24,874
|
|
|
Furniture,
fixtures and equipment
|
73,362
|
|
|
48,793
|
|
| Software
|
3,870
|
|
|
3,211
|
|
|
Total
|
193,418
|
|
|
155,477
|
|
| Less
accumulated depreciation |
(
52,708)
|
|
|
(
32,214)
|
|
|
Total
|
140,710
|
|
|
123,263
|
|
| Construction
in-progress |
23,764
|
|
|
39,637
|
|
|
Total
property and equipment, net |
$
|
164,474
|
|
|
$
|
162,900
|
|
Depreciation
expense totaled approximately $20.9 million, $12.9
million and $7.6 million for the years ended
December 31, 2024, 2023 and 2022, respectively.
Other
assets
Other
assets consisted of the following as of the periods presented (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
December
31, 2024 |
|
December
31, 2023 |
|
Operating
lease right-of-use assets
|
$
|
52,551
|
|
|
$
|
59,746
|
|
|
Indemnification
asset (see Note 2)
|
4,082
|
|
|
6,388
|
|
|
Interest
rate cap, non-current
|
—
|
|
|
8,559
|
|
|
|
|
|
| Other
|
3,156
|
|
|
2,929
|
|
|
Total
other assets |
$
|
59,789
|
|
|
$
|
77,622
|
|
Accrued
expenses and other current liabilities
Accrued
expenses consisted
of the following as of the periods presented
(in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
December
31, 2024 |
|
December
31, 2023 |
| Employee
related |
$
|
17,163
|
|
|
$
|
12,905
|
|
|
Operating
lease liabilities, current portion
|
7,481
|
|
|
6,780
|
|
| Accrued
interest payable |
4,566
|
|
|
9,202
|
|
| Professional
services |
2,233
|
|
|
2,277
|
|
|
Accrued
property and equipment
|
1,732
|
|
|
632
|
|
| Customer
deposits |
910
|
|
|
2,156
|
|
| Sales
and use tax liability |
779
|
|
|
1,001
|
|
|
Accrued
MyChem Retention Payments, current portion (see Note 2)
|
—
|
|
|
19,446
|
|
|
Accrued
restructuring costs (see Note 3)
|
—
|
|
|
2,814
|
|
|
|
|
|
|
|
|
|
| Other
|
1,543
|
|
|
3,024
|
|
|
Total
accrued expenses and other current liabilities |
$
|
36,407
|
|
|
$
|
60,237
|
|
Other
long-term liabilities
Other
long-term liabilities consisted of the following as of the periods presented (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
December
31, 2024 |
|
December
31, 2023 |
|
Operating
lease liabilities, non-current
|
$
|
41,381
|
|
|
$
|
47,510
|
|
|
Accrued
Alphayzme Retention Payments, non-current (see Note 2)
|
6,580
|
|
|
3,202
|
|
|
Acquisition
related tax liability (see Note 2)
|
4,082
|
|
|
6,388
|
|
|
Contingent
consideration, non-current
|
—
|
|
|
1,872
|
|
|
|
|
|
| Other
|
423
|
|
|
522
|
|
|
Total
other long-term liabilities |
$
|
52,466
|
|
|
$
|
59,494
|
|
7.
Government
Assistance
Cooperative
Agreement
TriLink
has a cooperative agreement (the “Cooperative Agreement”) with the U.S. Department of Health
and Human Services (“HHS”), to advance the development of domestic manufacturing
capabilities and to expand TriLink’s domestic production capacity in its San Diego manufacturing
campus (the “Flanders San Diego Facility”) for products critical to the development and
manufacture of mRNA vaccines and therapeutics. The Flanders San Diego Facility consists of
two buildings (“Flanders I” and “Flanders II”),
however, the Cooperative Agreement is exclusively involved in Flanders I.
The
Cooperative Agreement requires the Company to provide the U.S. Government with conditional priority
access and certain preferred pricing obligations for a 10-year
period from the completion of the construction project for the production of a medical
countermeasure (or a component thereof) that the Company manufactures in the Flanders San Diego Facility
during a declared public health emergency.
Pursuant
to certain requirements, TriLink was awarded an amount equal to $
38.8 million or 50
% of the construction and validation costs currently budgeted for the Flanders San
Diego Facility. The contract period of performance is May 2022 through March 2035, which is the
effective date of the Cooperative Agreement through the anticipated expiration of the 10-year conditional priority access period. Amounts reimbursed are
subject to audit and may be recaptured by the HHS in certain circumstances.
During
the years ended December 31, 2024 and 2023, the Company has received $
7.1 million
and $12.9 million,
respectively, of
reimbursements
under the Cooperative Agreement with equal offsets recorded to property and equipment
on the consolidated balance sheets. As of December 31, 2024 and 2023, the Company has recorded
receivables of $
0.7
million
and $1.1 million,
respectively, within prepaid expenses and other current assets, with equal offsets to property and
equipment on the consolidated balance sheets.
8.
Leases
All
of the Company's facilities, including office, laboratory and manufacturing space, are occupied
under long-term non-cancelable lease arrangements with various expiration dates through 2038, some
of which include options to extend up to 20
years. The Company does not have any leases that include residual value guarantees.
The
Company has a $0.5
million outstanding letter of credit as security for a lease agreement for a facility in San Diego,
California, which reduced the availability of credit under the Revolving Credit Facility (see Note
10).
The
following table presents supplemental balance sheet information related to the Company's leases
as of the periods presented below (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Line
Item in the Consolidated Balance Sheets
|
|
December
31, 2024 |
|
December
31, 2023 |
|
Right-of-use
assets |
|
|
|
|
|
|
Finance
leases |
Property and
equipment, net |
|
$
|
70,061
|
|
|
$
|
75,382
|
|
|
Operating
leases |
Other
assets |
|
52,551
|
|
|
59,746
|
|
|
Total
right-of-use assets |
|
$
|
122,612
|
|
|
$
|
135,128
|
|
|
|
|
|
|
|
|
Current
lease liabilities |
|
|
|
|
|
|
Finance
leases |
Current
portion of finance lease liabilities |
|
$
|
792
|
|
|
$
|
633
|
|
|
Operating
leases |
Accrued
expenses and other current liabilities |
|
7,481
|
|
|
6,780
|
|
|
Total
current lease liabilities |
|
$
|
8,273
|
|
|
$
|
7,413
|
|
|
|
|
|
|
|
|
Non-current
lease liabilities |
|
|
|
|
|
|
Finance
leases |
Finance
lease liabilities, less current portion |
|
$
|
31,106
|
|
|
$
|
31,897
|
|
|
Operating
leases |
Other
long-term liabilities |
|
41,381
|
|
|
47,510
|
|
|
Total
non-current lease liabilities |
|
$
|
72,487
|
|
|
$
|
79,407
|
|
The
components of the net lease costs reflected in the Company's consolidated statements of
operations were as follows for the periods presented (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year
Ended December 31, |
|
2024
|
|
2023
|
|
2022
|
|
Finance
lease costs: |
|
|
|
|
|
|
Depreciation
of leased assets |
$
|
5,321
|
|
|
$
|
3,217
|
|
|
$
|
—
|
|
|
Interest
on lease liabilities |
2,695
|
|
|
1,696
|
|
|
—
|
|
|
Total
finance lease costs |
8,016
|
|
|
4,913
|
|
|
—
|
|
|
|
|
|
|
|
|
Operating
lease costs |
12,003
|
|
|
12,417
|
|
|
8,800
|
|
|
Variable
lease costs |
3,709
|
|
|
3,940
|
|
|
2,742
|
|
|
Total
lease costs |
$
|
23,728
|
|
|
$
|
21,270
|
|
|
$
|
11,542
|
|
The
weighted average remaining lease term and weighted average discount rate related to the
Company's ROU assets and lease liabilities for its leases were as follows as of the periods
presented below:
|
|
|
|
|
|
|
|
|
|
|
|
|
December
31, 2024 |
|
December
31, 2023 |
|
Weighted
average remaining lease term (in years): |
|
|
|
|
Finance
leases |
13.2
|
|
14.2
|
|
Operating
leases |
6.6
|
|
7.3
|
|
|
|
|
|
Weighted
average discount rate: |
|
|
|
|
Finance
leases |
8.4
|
%
|
|
8.4
|
%
|
|
Operating
leases |
6.8
|
%
|
|
6.7
|
%
|
Supplemental
information concerning the cash flow impact arising from the Company's leases recorded in the
Company's consolidated statements of cash flows is detailed in the following table for the
periods presented (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year
Ended December 31, |
|
2024
|
|
2023
|
|
2022
|
|
Cash
paid for amounts included in lease liabilities: |
|
|
|
|
|
|
Financing
cash flows used for finance leases |
$
|
633
|
|
|
$
|
332
|
|
|
$
|
—
|
|
|
Operating
cash flows used for finance leases |
2,695
|
|
|
1,696
|
|
|
—
|
|
|
Operating
cash flows used for operating leases |
10,224
|
|
|
10,306
|
|
|
7,049
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As
of December 31, 2024, the Company expects that its future minimum lease payments will
become due and payable as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Finance
Leases |
|
Operating
Leases |
|
Total
|
|
2025
|
$
|
3,427
|
|
|
$
|
10,599
|
|
|
$
|
14,026
|
|
|
2026
|
3,530
|
|
|
10,356
|
|
|
13,886
|
|
|
2027
|
3,636
|
|
|
8,888
|
|
|
12,524
|
|
|
2028
|
3,745
|
|
|
9,003
|
|
|
12,748
|
|
|
2029
|
3,857
|
|
|
9,360
|
|
|
13,217
|
|
|
Thereafter
|
36,500
|
|
|
16,535
|
|
|
53,035
|
|
|
Total
minimum lease payments |
54,695
|
|
|
64,741
|
|
|
119,436
|
|
|
Less:
interest |
(
22,797
) |
|
|
(
15,879
) |
|
|
(
38,676
) |
|
|
Total
lease liabilities |
$
|
31,898
|
|
|
$
|
48,862
|
|
|
$
|
80,760
|
|
9.
Commitments
and Contingencies
Unconditional
Purchase Obligations
In
the ordinary course of business, we enter into certain unconditional purchase obligations with our
suppliers. These are agreements to purchase products and services that are enforceable, legally binding,
and specify terms that include provisions with respect to quantities, pricing and timing of
purchases.
Amounts
purchased under these obligations totaled $6.1
million and $
3.0
million for
the years ended December 31, 2024 and 2023, respectively. Such amounts were
not
material for the year ended December 31, 2022.
As
of December 31, 2024, future minimum commitments under these obligations were as follows (in
thousands):
|
|
|
|
|
|
|
|
| 2025
|
$
|
619
|
|
| 2026
|
366
|
|
| 2027
|
4
|
|
|
|
|
|
|
|
|
Total
|
$
|
989
|
|
Legal
Proceedings
The
Company is involved in various legal proceedings arising in the normal course of business. The Company
accrues for a loss contingency when it determines that it is probable, after consultation with counsel,
that a liability has been incurred and the amount of such loss can be reasonably estimated. The Company
believes that the results of any such contingencies, either individually or in the aggregate, will not
have a material adverse effect on the Company’s consolidated financial position, results of
operations or cash flows.
On
March 3, 2025, a purported stockholder filed a putative class action lawsuit against the Company and
certain officers of the Company in the United States District Court for the Southern District of
California, captioned Nelson
v. Maravai Lifesciences Holdings, Inc., et al.
(the “Securities Class Action”). The Securities Class Action generally alleges that the
Company and certain officers of the Company violated federal securities laws by making allegedly
materially false or misleading statements about the Company’s business, operations, and prospects,
and asserts claims under Sections 10(b) and 20(a) of the Exchange Act, as amended, and Rule 10b-5
promulgated under the Exchange Act. The plaintiff seeks to represent a putative class of investors who
purchased or acquired the Company’s stock between August 7, 2024 and February 24, 2025. The
Securities Class Action seeks, among other things, compensatory damages and attorneys’ fees and
costs. The case is in its very early stages. The Company anticipates that motions for appointment of a
lead plaintiff will be due in early May 2025.
The
Company intends to vigorously defend the Securities Class Action. The Company cannot reasonably estimate
any loss or range of loss that may arise from the Securities Class Action.
Indemnification
Agreements
In
the ordinary course of business, we may provide indemnification of varying scope and terms to vendors,
lessors, customers and other parties with respect to certain matters including, but not limited to,
losses arising out of breach of such agreements or from intellectual property infringement claims made
by third parties, and losses arising from breach of representations, warranties and covenants to
counterparties set forth in agreements with such parties. We have also agreed to our directors and
officers to the maximum extent permitted under applicable state laws pursuant to standard director and
officer indemnification agreements and our corporate charter and bylaws. The maximum potential amount of
future payments that we could be required to make under these indemnification agreements is, in many
cases, unlimited. We have not incurred any material costs as a result of such indemnifications and are
not currently aware of any indemnification claims.
10.
Long-Term
Debt
Credit
Agreement
Maravai
Intermediate Holdings, LLC (“Intermediate”), a wholly-owned subsidiary of Topco LLC, along
with certain of its subsidiaries (together with Intermediate, the “Borrowers”) are parties
to a credit agreement (as amended, the “Credit Agreement”), which provides for a $
600.0
million term loan facility, maturing October 2027 (the “Term Loan”) and a
$167.0
million revolving credit facility, maturing October 2029 (subject to springing
maturity provisions based on the maturity of the Term Loan) (the “Revolving Credit
Facility”). Borrowings under the Credit Agreement bear interest at a variable rate based on Term
Secured Overnight Financing Rate (“SOFR”) plus an applicable interest rate margin.
As
of December 31, 2024, the interest rate on the Term Loan was 7.62% per annum.
The
Revolving Credit Facility also provides availability for the issuance of letters of credit up to an
aggregate limit of $20.0
million. As of December 31, 2024, the Company had a $0.5 million outstanding letter of credit as security for a
lease agreement, which reduced the availability for the future issuance of letters of credit under the
Revolving Credit Facility to $19.5
million.
Borrowings
under the Credit Agreement are unconditionally guaranteed by Topco LLC, together with the existing and
future material domestic subsidiaries of Topco LLC (subject to certain exceptions), as specified in the
respective guaranty agreements. Borrowings under the Credit Agreement are also secured by a
first-priority lien and security interest in substantially all of the assets (subject to certain
exceptions) of existing and future material domestic subsidiaries of Topco LLC that are loan
parties.
In
January 2022, the Company entered into an amendment (the “Second Amendment”) to the Credit
Agreement to refinance the previous term loan and to replace the London Interbank Offered Rate
(“LIBOR”) with a Term SOFR based rate. As a result, the Company recorded a loss on
extinguishment of debt of $
0.2 million in the accompanying consolidated statements of operations during
the year ended December 31, 2022. As part of the refinancing, the Company incurred $0.9 million of various costs, of which an insignificant amount was
related to an original issuance discount, and were all capitalized in the accompanying balance sheet
within long-term debt and are subject to amortization over the term of the refinanced debt as an
adjustment to interest expense using the effective interest method.
In
September 2024, the Company entered into an amendment (the “Third Amendment”) to the Credit
Agreement, which extended the maturity date of the Revolving Credit Facility and reduced the
lenders’ aggregate commitments under the Revolving Credit Facility. As a result, the Company
recorded a loss on partial extinguishment of debt of $0.2
million in the accompanying consolidated statements of operations during the year
ended December 31, 2024. As part of the refinancing, the Company incurred $1.2
million of costs, of which $1.1
million was related to an arranger fee, and were all capitalized in the accompanying
balance sheet within assets as there is no
borrowing balance outstanding related to the Revolving Credit Facility. As of December 31, 2024,
capitalized financing costs totaled $1.8 million and are
recorded within other assets on the accompanying consolidated balance sheet.
The
Term Loan requires mandatory quarterly principal payments of $
1.4 million, which began in March 2022, and all remaining outstanding
principal is due on maturity in October 2027. The Term Loan includes prepayment provisions that
allow the Company, at our option, to repay all or a portion of the outstanding principal at any time. In
December 2024, the Company voluntarily pre-paid, using cash on hand, $
228.0 million of aggregate principal amount of the Term Loan. There were no
prepayment penalties associated with this prepayment of principal. As a result of the prepayment, the
Company recorded a loss on partial extinguishment of debt of $3.0 million in the accompanying consolidated statements of operations
during the year ended December 31, 2024 related to the write-off of pre-existing deferred financing
costs.
The
Revolving Credit Facility allows the Company to repay and borrow from time to time until its maturity
date, at which time all amounts borrowed must be repaid. Subject to certain exceptions and limitations,
we are required to repay borrowings under the Term Loan and Revolving Credit Facility with the proceeds
of certain occurrences, such as the incurrence of debt, certain equity contributions and certain asset
sales or dispositions.
Accrued
interest under the Credit Agreement is payable by us (a) quarterly in arrears with respect to base
rate loans, (b) at the end of each interest rate period (or at each three-month interval in the
case of loans with interest periods greater than three months) with respect to Term SOFR rate loans,
(c) on the date of any repayment or prepayment and (d) at maturity (whether by acceleration or
otherwise). An annual commitment fee is applied to the daily unutilized amount under the Revolving
Credit Facility at 0.375
% per annum, with one stepdown to
0.25% per annum based on Intermediate’s first lien net leverage ratio
calculation.
The
Credit Agreement requires that we make mandatory prepayments on the Term Loan principal upon certain
excess cash flow, subject to certain step-downs based on the Company’s first lien net leverage
ratio. The excess cash flow shall be reduced to 25
% or 0% of
the calculated excess cash flow if the Company’s first lien net leverage ratio was equal to or
less than 4.75:1.00 or
4.25:1.00,
respectively, however, no prepayment shall be required to the extent excess cash flow calculated for the
respective period is equal to or less than $10.0
million. As of December 31, 2024, the Company’s first lien net leverage
ratio was less than 4.25:1.00.
Thus, a mandatory prepayment on the Term Loan out of our excess cash flow was not required.
The
Credit Agreement contains certain covenants, including, among other things, covenants limiting our
ability to incur or prepay certain indebtedness, pay dividends or distributions, dispose of assets,
engage in mergers and consolidations, make acquisitions or other investments and make changes to the
nature of the business. Additionally, the Credit Agreement requires us to maintain a certain net
leverage ratio if the outstanding debt balance on the Revolving Credit Facility exceeds 35.0% of the aggregate amount of available credit of $167.0
million, or $58.5 million. The Company was in compliance with these covenants as of
December 31, 2024.
Interest
Rate Cap
The
Company was party to an interest rate cap agreement to manage a portion of its variable interest rate
risk on its outstanding long-term debt. Under the terms of the contract, the Company was entitled to
receive from the counterparty, at each calendar quarter end, the amount, if any, by which a specified
defined floating market rate exceeded the cap strike interest rate, applied to the contract’s
notional amount of $500.0
million. The floating rate of interest was reset at the end of each three-month
period. The contract expired on January 19, 2025.
The
interest rate cap agreement was not designated as a hedging relationship and was recognized on the
consolidated balance sheet at fair value of $1.4 million, within prepaid expenses and other current assets, as
of December 31, 2024 and $8.6
million, within other assets, as of December 31, 2023. Changes in fair value
were recognized within interest expense in the consolidated
statements
of operations. Proceeds from the interest rate cap agreement were reflected in cash flows used in
financing activities in the consolidated statements of cash flows.
The
Company’s long-term debt consisted of the following as of the periods presented (in
thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
December
31, 2024 |
|
December
31, 2023 |
|
Term
Loan
|
$
|
299,680
|
|
|
$
|
533,120
|
|
| Unamortized
debt issuance costs |
(
3,748) |
|
|
(
8,973) |
|
| Total
long-term debt |
295,932
|
|
|
524,147
|
|
| Less:
current portion |
(
5,440) |
|
|
(
5,440) |
|
|
Total
long-term debt, less current portion |
$
|
290,492
|
|
|
$
|
518,707
|
|
There
were
no
borrowing balances outstanding on the Company’s Revolving Credit Facility as of
December 31, 2024 and 2023.
As
of December 31, 2024, the aggregate future principal maturities of the Company’s debt
obligations based on contractual due dates were as follows (in thousands):
|
|
|
|
|
|
| 2025
|
$
|
5,440
|
|
| 2026
|
5,440
|
|
| 2027
|
288,800
|
|
|
|
|
|
|
|
|
Total
long-term debt |
$
|
299,680
|
|
11.
Stockholders’
Equity
Amendment
and Restatement of Certificate of Incorporation
In
November 2020, in connection with the Organizational Transactions, the Company’s certificate of
incorporation was amended and restated to, among other things, provide for the (i) authorization of
500,000,000 shares of Class A common stock with a par value of $0.01 per
share; (ii) authorization of
300,000,000 shares of Class B common stock with a par value of $0.01 per
share; (iii) authorization of
50,000,000 shares of preferred stock with a par value of $0.01
per share.
Holders
of Class A and Class B common stock are entitled to
one
vote per share. Except as otherwise required in the Certificate of Incorporation or by
applicable law, the holders of Class A common stock and Class B common stock shall vote together as a
single class on all matters on which stockholders are generally entitled to vote. Holders of the Class A
common stock are entitled to receive dividends, and upon the Company’s dissolution or liquidation,
after payment in full of all amounts required to be paid to creditors and to the holders of preferred
stock having liquidation preferences, if any, the holders of shares of Class A common stock will be
entitled to receive the Company’s pro rata remaining assets available for distribution. Holders of
Maravai’s Class B common stock are not entitled to receive dividends and will not be entitled to
receive any distributions upon dissolution or liquidation of Maravai. Holders of Class A and Class B
common stock do not have preemptive or subscription rights. As of December 31, 2024, no preferred
stock was outstanding.
We
are required to, at all times, maintain (i) a one-to-one ratio between the number of shares of Class A common stock
outstanding and the number of LLC Units owned by us and (ii) a one-to-one ratio between the
number of shares of Class B common stock owned by the MLSH 1 and the number of LLC Units owned by the
MLSH 1. We may issue shares of Class B common stock only to the extent necessary to maintain these
ratios. Shares of Class B common stock are transferable only together with an equal number of LLC Units
if we, at the election of MLSH 1, exchange LLC Units for shares of Class A common stock. All Class B
common stock that is transferred shall be automatically retired and cancelled and shall no longer be
outstanding.
Exchange
of Topco LLC Units and Block Trade
In
May 2024, MLSH 1 exchanged 8,409,946 LLC Units of Topco LLC
(paired with an equal number of shares of our Class B common stock) for 8,409,946 shares of the
Company’s Class A common stock. Upon receipt by the Company, the shares of our Class B common
stock were subsequently cancelled and retired. Following the exchange, MLSH 1 and MLSH 2 sold an
aggregate of 9,940,974 shares of our Class A common stock in a block trade
(“May 2024 Block Trade”).
The
Company did not receive any of the proceeds from the sale of shares of our Class A common stock by
either MLSH 1 or MLSH 2, but did incur legal and other costs associated with the May 2024 Block Trade,
which were not significant.
During
the years ended December 31, 2023 and 2022, MLSH 1 did not exchange any Paired Interests.
Structuring
Transactions
In
connection with the Company’s acquisition of Alphazyme (see Note 2), the Company undertook a
series of structuring transactions (the “Structuring Transactions”), including:
•On
January 18, 2023, the Company acquired all of the outstanding membership interests in Alphazyme (see
Note 2).
•On
January 19, 2023, the Company entered into a contribution agreement (the “Contribution
Agreement”) with Alphazyme Holdings, Inc. (“Alphazyme Holdings”), a wholly owned
subsidiary of the Company, pursuant to which the Company contributed all such membership interests in
Alphazyme (the “Alphazyme Membership Interest”) to Alphazyme Holdings.
•On
January 22, 2023, Alphazyme Holdings entered into a contribution and exchange agreement (the
“Contribution and Exchange Agreement”) with Topco LLC, pursuant to which it contributed all
of the Alphazyme Membership Interests to TopCo LLC in exchange for 5,059,134 newly-issued LLC Units
of Topco LLC at a price per unit of $13.87, which was equal to the
50-day volume-weighted average price of the Company’s Class A common stock as
calculated on January 18, 2023 (the “Contribution and Exchange”).
•Immediately
following the Contribution and Exchange, the Company entered into a forfeiture agreement (the
“Forfeiture Agreement”) with Alphazyme Holdings, TopCo LLC and MLSH 1, a related party,
pursuant to which each of the Company (together with Alphazyme Holdings) and MLSH 1 agreed to forfeit
5,059,134 and 4,871,970 LLC Units, respectively, representing
3.7
% of the Company’s (together with Alphazyme Holdings) and MLSH 1’s
respective LLC Units of Topco LLC, and an equal number of shares of the Company’s Class B common
stock, par value $0.01 per
share, were forfeited by MLSH 1, in each case for no consideration.
These
were considered transactions between entities under common control. As a result, the consolidated
financial statements for periods prior to the these transactions have been adjusted to combine the
previously separate entities for presentation purposes.
12.
Net
(Loss) Income Per Class A Common Share Attributable to Maravai LifeSciences Holdings, Inc.
Basic
net (loss) income per Class A common share has been calculated by dividing net (loss) income for the
period, adjusted for net (loss) income attributable to non-controlling interests, by the weighted
average number of Class A common shares outstanding during the period. Diluted net (loss) income per
Class A common share gives effect to potentially dilutive securities by application of the treasury
stock method or if-converted method, as applicable. Diluted net (loss) income per Class A common share
attributable to the Company is computed by adjusting the net (loss) income and the weighted average
number of Class A common shares outstanding to give effect to potentially diluted securities. In periods
in which the Company reports a net loss attributable to Maravai LifeSciences Holdings, Inc., diluted net
loss per Class A common share attributable to the Company is the same as basic net loss per Class A
common share attributable to the Company, since dilutive equity instruments are not assumed to have been
issued if their effect is anti-dilutive. The Company reported a net loss attributable to Maravai
LifeSciences Holdings, Inc. for the years ended December 31, 2024 and 2023.
The
following table presents the computation of basic and diluted net (loss) income per common share
attributable to the Company for the periods presented (in thousands, except per share
amounts):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year
Ended December 31, |
|
2024
|
|
2023
|
|
2022
|
| Numerator:
|
|
|
|
|
|
|
Net
(loss) income
|
$
|
(
259,622
) |
|
|
$
|
(
138,375
) |
|
|
$
|
490,663
|
|
|
Less:
loss (income) attributable to common non-controlling interests
|
114,776
|
|
|
19,346
|
|
|
(
270,458)
|
|
|
Net
(loss) income attributable to Maravai LifeSciences Holdings, Inc.—basic
|
(
144,846)
|
|
|
(
119,029)
|
|
|
220,205
|
|
|
Net
(loss) income effect of dilutive securities:
|
|
|
|
|
|
|
Effect
of dilutive employee stock purchase plan, RSUs and options |
$
|
—
|
|
|
—
|
|
|
87
|
|
|
Effect
of the assumed conversion of Class B common stock |
—
|
|
|
—
|
|
|
205,984
|
|
|
Net
(loss) income attributable to Maravai LifeSciences Holdings,
Inc.—diluted
|
$
|
(
144,846)
|
|
|
$
|
(
119,029)
|
|
|
$
|
426,276
|
|
|
|
|
|
|
|
| Denominator:
|
|
|
|
|
|
|
Weighted
average Class A common shares outstanding—basic
|
137,906
|
|
|
131,919
|
|
|
131,545
|
|
| Weighted
average effect of dilutive securities: |
|
|
|
|
|
|
Effect
of dilutive employee stock purchase plan, RSUs and options |
—
|
|
|
—
|
|
|
109
|
|
|
Effect
of the assumed conversion of Class B common stock |
—
|
|
|
—
|
|
|
123,669
|
|
|
Weighted
average Class A common shares outstanding—diluted
|
137,906
|
|
|
131,919
|
|
|
255,323
|
|
|
|
|
|
|
|
|
Net
(loss) income per Class A common share attributable to Maravai LifeSciences
Holdings, Inc.:
|
|
|
|
|
|
| Basic
|
$
|
(
1.05
) |
|
|
$
|
(
0.90
) |
|
|
$
|
1.67
|
|
| Diluted
|
$
|
(
1.05
) |
|
|
$
|
(
0.90
) |
|
|
$
|
1.67
|
|
Shares
of Class B common stock do not share in the earnings or losses of the Company, and are therefore not
participating securities. As such, a separate presentation of basic and diluted net (loss) income per
share for Class B common stock under the two-class method has not been presented.
The
following table presents potentially dilutive securities excluded from the computation of diluted
net (loss) income per share for the periods presented because their effect would have been
anti-dilutive for the periods presented (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year
Ended December 31, |
|
2024
|
|
2023
|
|
2022
|
|
|
|
|
|
|
| Restricted
stock units |
1,751
|
|
|
3,181
|
|
|
74
|
|
| Stock
options |
3,716
|
|
|
4,246
|
|
|
2,769
|
|
| Shares
estimated to be purchased under employee stock purchase plan |
72
|
|
|
—
|
|
|
13
|
|
| Shares
of Class B common stock |
110,684
|
|
|
119,094
|
|
|
—
|
|
|
Total
|
116,223
|
|
|
126,521
|
|
|
2,856
|
|
Shares
underlying contingently issuable awards that have not met the necessary conditions as of the end of a
reporting period are not included in the calculation of diluted net (loss) income per Class A common
share attributable to the Company for that period. The Company had contingently issuable PSUs
outstanding that did not meet the market and performance conditions as of December 31, 2024, 2023
and 2022 and, therefore, were excluded from the calculation of diluted net (loss) income per Class A
common share attributable to the Company. The maximum number of potentially dilutive shares that could
be issued upon vesting for such awards was insignificant as of December 31, 2024, 2023 and
2022.
13.
Stock-Based
Compensation
In
November 2020, the Company’s board of directors adopted the 2020 Omnibus Incentive Plan (the
“2020 Plan”). The 2020 Plan provides for an automatic increase in the number of shares
reserved for issuance thereunder on January 1 of each of the first 10 calendar years during the term of the 2020
Plan, by the lesser of (i) 4% of the total number of shares of Class A common stock
outstanding on each December 31 immediately prior to the date of increase or (ii) such number of shares
of
Class
A common stock determined by our board of directors or compensation committee. Shares of Class A common
stock subject to an award that expires or is cancelled, forfeited, exchanged, settled in cash or
otherwise terminated without delivery of shares and shares withheld to pay the exercise price of, or to
satisfy the withholding obligations with respect to, an award will again be available for delivery
pursuant to other awards under the 2020 Plan.
All
awards granted under the 2020 Plan are intended to be treated as (i) stock options, including incentive
stock options (“ISOs”), (ii) stock appreciation rights (“SARs”), (iii)
restricted share awards (“RSAs”), (iv) restricted stock units (“RSUs”), (v)
performance awards, (vi) dividend equivalents, or (vii) other stock or cash awards as may be determined
by the plan’s administrator from time to time. The term of each option award shall be no more than
10 years from the date of grant. The exercise
price of a stock option shall not be less than 100% (or, in the case of an ISO granted to a ten percent
stockholder, 110%) of the fair market value of the shares on the date of
grant. As of December 31, 2024, only stock options, RSUs and PSUs have been issued.
In
November 2020, the Company adopted the 2020 Employee Stock Purchase Plan (the “ESPP”) to
assist employees in acquiring a stock ownership interest in the Company and to encourage them to remain
in the employment of the Company. The ESPP permits eligible employees to purchase shares of Class A
common stock at a discount through payroll deductions during specified six-month purchase periods. The price of
shares purchased under the ESPP is equal to the lower of the grant date price less a 15% discount or a 15% discount to the market closing price on the date of
purchase.
Compensation
expense recognized for the ESPP was insignificant for all periods presented.
The
Company began issuing PSUs during 2022 to certain executive employees under the 2020 Plan. Certain PSUs
vest only if the executive employee satisfies a service-based vesting condition and market condition.
The executive employee must remain employed through the third anniversary of the grant date. The award
is eligible to vest based on the achievement of certain price targets of the Company’s stock price
over a defined performance period. Certain other PSUs are subject to a performance condition being
satisfied. The award is eligible to vest upon achievement of certain revenue-based performance goals and
are subject to continued service over a defined performance period.
Compensation
expense recognized for these PSUs was insignificant for all periods presented.
Stock
Options
The
following table summarizes information related to stock options:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number
of Stock Options (in thousands) |
|
Weighted
Average Exercise Price per Stock Option |
|
Weighted
Average Remaining Contractual Life (in years) |
|
Aggregate
Intrinsic Value (in thousands) |
| Outstanding
as of December 31, 2023 |
4,305
|
|
|
$
|
20.55
|
|
|
8.5
|
|
$
|
19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cancelled
|
(
589) |
|
|
22.89
|
|
|
|
|
|
| Outstanding
as of December 31, 2024 |
3,716
|
|
|
$
|
20.18
|
|
|
7.2
|
|
$
|
—
|
|
| Exercisable
as of December 31, 2024 |
2,304
|
|
|
$
|
22.14
|
|
|
6.6
|
|
$
|
—
|
|
The
Company uses the Black-Scholes option pricing model to estimate the fair value of each option grant on
the date of grant or any other measurement date. The assumptions and estimates are as follows:
•Expected
term
- The expected term represents the period that stock-based awards are expected to be outstanding and is
determined using the simplified method. Our historical share option exercise information is limited due
to a lack of sufficient data points and does not provide a reasonable basis upon which to estimate an
expected term.
•Expected
volatility
- The expected volatility was derived from the historical stock volatilities of peer public companies
within our industry that are considered to be comparable to our business over a period equivalent to the
expected term of the stock-based awards, since our stock trading history is limited.
•Risk-free
interest rate
- The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the date of grant
for zero-coupon U.S. Treasury notes with maturities approximately equal to the stock-based awards’
expected term.
•Expected
dividend yield
- The expected dividend yield is zero as we have no plans to make
dividend payments.
A
summary of the assumptions used to estimate the fair value of stock option grants for the years
presented is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year
Ended December 31, |
|
2024
|
|
2023
|
|
2022
|
| Expected
volatility |
N/A
|
|
48.0
|
%
|
|
51.3
|
%
|
| Risk-free
interest rate |
N/A
|
|
3.6
|
%
|
|
2.8
|
%
|
| Expected
term (in years) |
N/A
|
|
6.5
|
|
6.1
|
| Expected
dividend yield |
N/A
|
|
—
|
%
|
|
—
|
%
|
Stock-based
compensation expense related to stock options was $10.0
million, $11.5
million and $8.1
million for the years ended December 31, 2024, 2023 and 2022, respectively. The total fair value of
stock options vested was $10.6 million, $11.9 million and $7.7 million for the years ended December 31, 2024, 2023
and 2022, respectively.
As
of December 31, 2024, the total unrecognized stock-based compensation related to stock options was
$12.1 million, which is expected be recognized over a
weighted-average period of approximately 2.0 years.
Restricted
Stock Units
The
Company has granted restricted stock unit awards to employees, non-employee directors and
contractors. The following table summarizes information related to RSUs:
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted
Stock Units (in thousands) |
|
Weighted
Average Fair Value per RSU at Grant Date |
| Balance
as of December 31, 2023 |
3,944
|
|
|
$
|
15.35
|
|
|
Granted
|
6,497
|
|
|
6.62
|
|
|
Vested
|
(
1,529)
|
|
|
15.38
|
|
|
Forfeited
|
(
966) |
|
|
12.33
|
|
| Balance
as of December 31, 2024 |
7,946
|
|
|
$
|
8.57
|
|
Stock-based
compensation expense related to RSUs was $36.8
million, $20.2
million and $8.2
million for the years ended December 31, 2024, 2023 and 2022, respectively. The total fair value of
RSUs vested was $12.1 million, $5.0 million and $1.0 million for the years ended December 31, 2024, 2023
and 2022, respectively.
As
of December 31, 2024, the total unrecognized stock-based compensation related to RSUs was $
39.2 million, which is expected be recognized over a
weighted-average period of approximately 1.3 years.
The
following table summarizes the total stock-based compensation expense included in the
Company’s consolidated statements of operations for the periods presented (in
thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year
Ended December 31, |
|
2024
|
|
2023
|
|
2022
|
| Cost
of sales |
$
|
9,649
|
|
|
$
|
7,324
|
|
|
$
|
4,192
|
|
| Selling,
general and administrative |
36,023
|
|
|
24,650
|
|
|
13,349
|
|
| Research
and development |
4,968
|
|
|
2,715
|
|
|
1,129
|
|
|
Restructuring
|
(
1,225) |
|
|
(
101
) |
|
|
—
|
|
|
Total
stock-based compensation
|
$
|
49,415
|
|
|
$
|
34,588
|
|
|
$
|
18,670
|
|
14.
Income
Taxes
As
of December 31, 2024 and 2023, we are subject to U.S. federal and state income taxes with respect
to our allocable share of any taxable income or loss of Topco LLC, as well as any stand-alone income or
loss we generate. Topco LLC is organized as a limited liability company and treated as a partnership for
federal tax purposes and generally does not pay income taxes on its taxable income in most
jurisdictions. Instead, Topco LLC’s taxable income or loss is passed through to its members,
including us.
Components
of (loss) income from continuing operations before income taxes for the periods presented were as
follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year
Ended December 31, |
|
2024
|
|
2023
|
|
2022
|
| U.S.
|
$
|
(
261,579)
|
|
|
$
|
617,681
|
|
|
$
|
551,472
|
|
| International
|
97
|
|
|
55
|
|
|
—
|
|
|
Total
(loss) income from continuing operations
|
$
|
(
261,482)
|
|
|
$
|
617,736
|
|
|
$
|
551,472
|
|
Income
tax (benefit) expense consisted of the following for the periods presented (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year
Ended December 31, |
|
2024
|
|
2023
|
|
2022
|
|
Current
tax (benefit) expense
|
|
|
|
|
|
|
Federal
|
$
|
(
1,621) |
|
|
$
|
405
|
|
|
$
|
16,312
|
|
|
State
and local |
(
278
) |
|
|
756
|
|
|
2,173
|
|
|
International
|
28
|
|
|
8
|
|
|
6
|
|
|
Total
current tax (benefit) expense
|
(
1,871) |
|
|
1,169
|
|
|
18,491
|
|
|
|
|
|
|
|
|
Deferred
tax expense
|
|
|
|
|
|
|
Federal
|
$
|
—
|
|
|
$
|
663,968
|
|
|
$
|
39,924
|
|
|
State
and local |
—
|
|
|
90,974
|
|
|
2,394
|
|
|
International
|
11
|
|
|
—
|
|
|
—
|
|
|
Total
deferred tax expense
|
11
|
|
|
754,942
|
|
|
42,318
|
|
|
|
|
|
|
|
|
Total
provision for income taxes |
$
|
(
1,860) |
|
|
$
|
756,111
|
|
|
$
|
60,809
|
|
A
reconciliation between the Company’s effective tax rate and the applicable U.S. federal
statutory income tax rate as of the periods presented is summarized as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December
31, 2024 |
|
December
31, 2023 |
|
December
31, 2022 |
| Federal
statutory rate |
21.0
|
%
|
|
21.0
|
%
|
|
21.0
|
%
|
| State
and local taxes, net of federal benefits |
(
0.1) |
|
|
14.9
|
|
|
0.6
|
|
| Deferred
tax revaluation |
1.0
|
|
|
1.2
|
|
|
0.3
|
|
| Income
of non-controlling interest |
(
9.2) |
|
|
0.8
|
|
|
(
10.3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Research
and development credits |
0.2
|
|
|
—
|
|
|
(
0.1) |
|
|
|
|
|
|
|
| Valuation
allowance |
(
13.2) |
|
|
87.6
|
|
|
0.1
|
|
|
Nondeductible
TRA movement
|
—
|
|
|
(
3.0) |
|
|
—
|
|
| Other
|
1.0
|
|
|
—
|
|
|
(
0.6) |
|
|
Effective
tax rate |
0.7
|
%
|
|
122.5
|
%
|
|
11.0
|
%
|
Deferred
income taxes reflect the net tax effects of temporary differences between the carrying amounts of
assets and liabilities for financial reporting purposes and the amounts used for income tax purposes
and operating loss and tax credit carryforwards.
Significant
items comprising the net deferred tax assets and liabilities were as follows as of the periods
presented below (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
December
31, 2024 |
|
December
31, 2023 |
| Deferred
tax assets |
|
|
|
|
Investment
in Topco LLC |
$
|
584,279
|
|
$
|
595,796
|
|
Net
operating loss
|
93,759
|
|
40,980
|
|
Deductions
to be received for the Tax Receivable Agreement payments |
—
|
|
1,408
|
|
Capital
loss carryforward |
3,252
|
|
3,256
|
|
Disallowed
interest carryforward
|
10,047
|
|
—
|
|
Other
|
1,775
|
|
712
|
| Total
deferred tax assets |
693,112
|
|
642,152
|
|
Valuation
allowance |
(
693,112) |
|
(
642,152) |
| Total
deferred tax assets, net of valuation allowance |
—
|
|
—
|
|
|
|
|
| Deferred
tax liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
(
11
) |
|
—
|
| Total
deferred tax liabilities |
(
11
) |
|
—
|
|
|
|
|
|
Total
net deferred tax liabilities
|
$
|
(
11
) |
|
$
|
—
|
As
a result of the Organizational Transactions, IPO, and subsequent exchanges and financing, we acquired
LLC Units and recognized a deferred tax asset for the difference between the financial reporting and tax
basis of our investment in Topco LLC which included net deferred tax assets of $0.0 million primarily associated with: (i) $584.3
million related to temporary differences in the book basis as compared to the tax
basis of our Company’s investment in Topco LLC, (ii) $0.0 million related to tax benefits from future deductions attributable
to payments under the TRA, (iii) $3.3
million related to the capital loss carryforwards, (iv) $93.8
million related to net operating loss carryforwards, (v) $10.0
million related to disallowed interest carryforwards, and (vi) $693.1 million valuation allowance on these and other
items.
The
valuation allowance increased by $51.0
million and $618.4
million during the years ended December 31, 2024 and 2023, respectively.
The
realizability of the Company’s deferred tax asset related to its investment in Topco LLC depends
on the Company receiving allocations of tax deductions for its tax basis in the investment and on the
Company generating sufficient taxable income to fully offset such deductions. Management assesses the
available positive and negative evidence to estimate whether sufficient future taxable income will be
generated to permit use of existing deferred tax assets. A significant piece of objective evidence
evaluated during the year ended December 31, 2024 was our current year and projected future pre-tax
losses. Due to our recent history of current year and projected near-term pre-tax losses, we determined
that the negative evidence outweighs the positive evidence and so it is more likely than not that our
deferred tax assets will not be utilized, and therefore the Company recorded a full valuation allowance
on its U.S. federal and state deferred tax assets. The objective negative evidence is difficult to
overcome and limits the ability to consider other subjective evidence, such as projections of future
growth. It is possible in the foreseeable future that there may be sufficient positive evidence, and
that the objective negative evidence related to pre-tax losses will no longer be present, in which event
the Company could release a portion or all of the valuation allowance. Release of any amount of
valuation allowance would result in a benefit to income tax expense for the period the release is
recorded, which could have a material impact on net earnings.
Net
operating loss (“NOL”) and tax credit carryforwards as of December 31, 2024
were as follows (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount
|
|
Expiration
Years |
|
Net
operating losses, federal
|
$
|
82.6
|
|
|
Does
not expire
|
|
Net
operating losses, state
|
11.2
|
|
|
Varies
by state
|
|
Capital
loss carryforward, federal
|
2.9
|
|
|
2026
|
|
Capital
loss carryforward, state
|
0.4
|
|
|
Varies
by state
|
|
Disallowed
interest carryforward, federal
|
10.0
|
|
|
Does
not expire
|
|
Tax
credits, federal |
0.8
|
|
|
2043
|
|
Tax
credits, state |
0.6
|
|
|
CA
- Do not expire |
As
of December 31, 2024 and 2023, the Company had $3.6
million and $5.2 million of
unrecognized tax benefits, all of which would affect the effective tax rate if recognized. The Company
expects our unrecognized tax benefits may decrease by $2.9 million in the next twelve months due to statute
expiration. The Company recognizes interest related to uncertain tax benefits as a component of income
tax expense, including $0.3
million recognized during the year ended December 31, 2024.
The
aggregate changes in the balance of the Company’s unrecognized tax benefits were as follows
for the periods presented (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year
Ended December 31, |
|
2024
|
|
2023
|
|
2022
|
| Balance,
beginning of year |
$
|
5,198
|
|
$
|
6,257
|
|
$
|
241
|
|
Gross
increases based on tax positions related to current year |
179
|
|
99
|
|
130
|
|
Gross
increases based on tax positions related to prior years |
73
|
|
—
|
|
6,775
|
|
Gross
decreases based on tax positions related to prior years |
(
1,867)
|
|
(
1,158)
|
|
(
889) |
| Balance,
end of year |
$
|
3,583
|
|
$
|
5,198
|
|
$
|
6,257
|
The
Company files income tax returns in the U.S. federal jurisdiction and various states and is not under
audit by taxing authorities in any of these jurisdictions. With exceptions for certain states, the
Company is no longer subject to U.S. federal, state, and local, or non-U.S. income tax examinations for
years before 2021.
Payable
to Related Parties Pursuant to the Tax Receivable Agreement
We
are a party to a TRA with MLSH 1 and MLSH 2. The TRA provides for the payment by us to MLSH 1 and MLSH
2, collectively, of 85
% of the amount of certain tax benefits, if any, that we actually realize, or in some
circumstances are deemed to realize, as a result of the Organizational Transactions, IPO and any
subsequent purchases or exchanges of LLC Units of Topco LLC. The Company expects to benefit from the
remaining 15% of
any cash tax savings that it realizes.
We
recognize the amount of TRA payments expected to be paid within the next 12 months and classify this
amount as current. This determination is based on our estimate of taxable income for the year ended
December 31, 2024. As of December 31, 2024, there was no current liability under the TRA.
As
of December 31, 2023, the Company has derecognized the remaining $683.8 million non-current liability under the TRA after
concluding it was not probable that the Company will be able to realize the remaining tax benefits based
on estimates of future taxable income. There have been no changes to our position as of
December 31, 2024. The estimation of liability under the TRA is by its nature imprecise and subject
to significant assumptions regarding the amount, character, and timing of the taxable income in the
future. If the Company concludes in a future period that the tax benefits are more likely than not to be
realized and releases its valuation allowance, the corresponding TRA liability amounts may be considered
probable at that time and recorded on the consolidated balance sheet and within earnings.
We
made payments of $7.3
million to MLSH 1 and MLSH 2 pursuant to the TRA during the year ended
December 31, 2024, of which $0.2
million is related to interest. We made payments of $42.6 million to MLSH 1 and MLSH 2 pursuant to the TRA during
the year ended December 31, 2023, of which $0.4
million was related to interest. We made payments of $35.3 million to MLSH 1 and MLSH 2 pursuant to the TRA during
the year ended December 31, 2022, of which $1.1
million was related to interest. As of December 31, 2024 there were
no
liabilities under the TRA. As of December 31, 2023, our liabilities under the TRA
were $7.1
million.
Tax
Distributions to Topco LLC’s Owners
Topco
LLC is subject to an operating agreement put in place at the date of the Organizational Transactions
(“LLC Operating Agreement”). The LLC Operating Agreement has numerous provisions related to
allocations of income and loss, as well as timing and amounts of distributions to its owners. This
agreement also includes a provision requiring cash distributions enabling its owners to pay their taxes
on income passing through from Topco LLC. These tax distributions are computed based on an assumed
income tax rate equal to the sum of (i) the maximum combined marginal federal and state income tax rate
applicable to an individual and (ii) the net investment income tax. The assumed income tax rate ranges
from 46.7
% to 54.1% in certain cases where the qualified business income
deduction is unavailable.
In
addition, under the tax rules, Topco LLC is required to allocate taxable income disproportionately to
its unit holders. Because tax distributions are determined based on the holder of LLC Units who is
allocated the largest amount of taxable income on a per unit basis, but are made pro rata based on
ownership, Topco LLC is required to make tax distributions that, in the aggregate, will likely exceed
the amount of taxes Topco LLC would have otherwise paid if it were taxed on its taxable income at the
assumed income tax rate. Topco LLC is subject to entity level taxation in certain states and certain of
its subsidiaries are subject to entity level U.S. and foreign income taxes. As a result, the
accompanying consolidated statements of operations include income tax expense related to those states
and to U.S. and foreign jurisdictions where Topco LLC or any of our subsidiaries are subject to income
tax.
During
the year ended December 31, 2024, Topco LLC paid tax distributions of $1.1 million to its owners, including $0.6 million to us. During the year ended December 31, 2023, Topco
LLC paid tax distributions of $20.3 million to its owners, including $10.7 million to us. During the year ended December 31, 2022, Topco
LLC paid tax distributions of $310.0 million to its owners, including $159.8 million to us.
As
of December 31, 2024, no
amounts for tax distributions have been accrued as such payments were made during the period.
15.
Employee
Benefit Plans
The
Company sponsors a 401(k) plan (the “Maravai LifeSciences 401(k) Plan”) pursuant to which
eligible employees can elect to contribute to the 401(k) Plan, subject to certain limitations, on a
pretax basis. The Company provides for a cash match of up to 50% of employee contributions up to the first 6
% of salary.
Total
contributions by the Company to the Maravai LifeSciences 401(k) Plan was approximately
$1.9
million,
$2.1
million and $1.6
million for the years ended December 31, 2024, 2023 and 2022, respectively.
16.
Related
Party Transactions
MLSH
1’s majority owner is GTCR, LLC (“GTCR”). The Company’s Chief Financial Officer
(“CFO”) and General Counsel are executives of MLSH 1 and MLSH 2.
Payable
to Related Parties Pursuant to the Tax Receivable Agreement
Concurrent
with the completion of the IPO, the Company entered into a TRA with MLSH 1 and MLSH 2. During the years
ended December 31, 2024, 2023 and 2022, the Company made TRA payments to both MLSH 1 and MLSH 2
(see Note 14).
Contribution,
Exchange and Forfeiture Agreement with MLSH 1
In
connection with the Company’s acquisition of Alphazyme, the Company undertook a series of
structuring transactions (see Note 11).
Topco
LLC Operating Agreement
MLSH
1 is party to the Topco LLC operating agreement put in place at the date of the Organizational
Transactions. This agreement includes a provision requiring cash distributions enabling its owners to
pay their taxes on income passing through from Topco LLC. During the years ended December 31, 2024,
2023 and 2022, the Company made distributions of $0.5 million, $9.6 million and $150.2 million for tax liabilities to MLSH 1 under this
agreement, respectively.
17.
Segments
Operating
segments are defined as components of an enterprise about which separate financial information is
available that is evaluated regularly by the chief operating decision maker, or decision-making group,
in deciding how to allocate resources and in assessing performance. The Company’s operating
segments are the same as its reportable segments. Segment results are
presented
in the same manner as we present our operations internally to make operating decisions and assess
performance. The accounting policies for the segments are the same as those described in Significant
Accounting Policies (see Note 1). The Company’s financial performance is reported in
two
segments.
A description of each segment follows:
•Nucleic
Acid Production:
focuses on the manufacturing and sale of highly modified nucleic acids products to support the needs of
customers’ research, therapeutic and vaccine programs. This segment also provides research
products for labeling and detecting proteins in cells and tissue samples.
•Biologics
Safety Testing:
focuses on the manufacturing and sale of host cell protein, bioprocess impurity detection, viral
clearance prediction kits and associated products. This segment also provides services for custom
antibody development, assay development, antibody affinity extraction and mass spectrometry that are
utilized by our customers in their biologic drug manufacturing spectrum.
The
Company has determined that adjusted earnings before interest, tax, depreciation and amortization
(“Adjusted EBITDA”) is the profit or loss measure that the CODM uses to make resource
allocation decisions and evaluate segment performance. Adjusted EBITDA assists management in comparing
the segment performance on a consistent basis for purposes of business decision-making by removing the
impact of certain items that management believes do not directly reflect our core operations and,
therefore, are not included in measuring segment performance. The Company defines Adjusted EBITDA as net
(loss) income before interest, taxes, depreciation and amortization, certain non-cash items and other
adjustments that we do not consider in our evaluation of ongoing operating performance from period to
period. Corporate costs, net of eliminations, are managed on a standalone basis and not allocated to
segments.
The
following schedules include revenue, expenses, and adjusted EBITDA for each of the Company’s
reportable segments for the periods presented (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year
Ended December 31, 2024 |
|
Nucleic Acid
Production |
|
Biologics
Safety Testing |
|
Total
|
|
Revenue
|
$
|
196,345
|
|
$
|
62,840
|
|
$
|
259,185
|
|
|
|
|
|
|
|
Less:
|
|
|
|
|
|
|
Cost
of revenue (1)
|
94,694
|
|
9,918
|
|
|
|
Selling
and marketing (1)
|
20,722
|
|
2,921
|
|
|
|
General
and administrative (1)
|
20,370
|
|
4,197
|
|
|
|
Research
and development (1)
|
9,713
|
|
1,960
|
|
|
|
Other
segment items (2)
|
33
|
|
3
|
|
|
|
Adjusted
EBITDA
|
50,813
|
|
43,841
|
|
$
|
94,654
|
|
Reconciliation
of total reportable segments’ adjusted EBITDA to loss before income
taxes
|
|
|
|
|
|
| Amortization
|
|
|
|
|
(
27,531) |
|
| Depreciation
|
|
|
|
|
(
20,852)
|
|
| Interest
expense |
|
|
|
|
(
47,700) |
|
| Interest
income |
|
|
|
|
27,403
|
|
| Corporate
costs, net of eliminations |
|
|
|
|
(
58,732) |
|
| Other
adjustments: |
|
|
|
|
|
|
Acquisition
contingent consideration |
|
|
|
|
2,003
|
|
|
Acquisition
integration costs |
|
|
|
|
(
5,559)
|
|
|
Stock-based
compensation
|
|
|
|
|
(
49,415) |
|
|
Merger
and acquisition related expenses |
|
|
|
|
(
1,728)
|
|
|
|
|
|
|
|
|
Loss
on extinguishment of debt
|
|
|
|
|
(
3,187) |
|
|
Acquisition
related tax adjustment |
|
|
|
|
(
2,306)
|
|
|
Tax
Receivable Agreement liability adjustment |
|
|
|
|
(
40
) |
|
|
|
|
|
|
|
|
Goodwill
impairment
|
|
|
|
|
(
166,151) |
|
|
Restructuring
costs (3)
|
|
|
|
|
(
11)
|
|
|
Other
|
|
|
|
|
(
2,330)
|
|
|
Loss
before income taxes
|
|
|
|
|
(
261,482)
|
|
|
Income
tax benefit
|
|
|
|
|
1,860
|
|
|
Net
loss
|
|
|
|
|
$
|
(
259,622
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year
Ended December 31, 2023 |
|
Nucleic Acid
Production |
|
Biologics
Safety Testing |
|
Total
|
| Revenue
|
$
|
224,769
|
|
$
|
64,176
|
|
$
|
288,945
|
| Intersegment
revenues |
—
|
|
3
|
|
3
|
|
224,769
|
|
64,179
|
|
288,948
|
|
Elimination
of intersegment revenues
|
|
|
|
|
(
3) |
|
Total
consolidated revenues |
|
|
|
|
$
|
288,945
|
|
|
|
|
|
|
| Less:
|
|
|
|
|
|
|
Cost
of revenue (1)
|
94,040
|
|
9,620
|
|
|
|
Selling
and marketing (1)
|
18,580
|
|
2,295
|
|
|
|
General
and administrative (1)
|
22,474
|
|
4,242
|
|
|
|
Research
and development (1)
|
7,010
|
|
1,077
|
|
|
|
Other
segment items (2)
|
7
|
|
37
|
|
|
|
Adjusted
EBITDA |
82,658
|
|
46,908
|
|
$
|
129,566
|
|
Reconciliation
of total reportable segments’ adjusted EBITDA to income before income
taxes
|
|
|
|
|
|
| Amortization
|
|
|
|
|
(
27,356) |
|
| Depreciation
|
|
|
|
|
(
12,898) |
|
| Interest
expense |
|
|
|
|
(
45,892) |
|
| Interest
income |
|
|
|
|
27,727
|
|
| Corporate
costs, net of eliminations |
|
|
|
|
(
64,257) |
|
| Other
adjustments: |
|
|
|
|
|
|
Acquisition
contingent consideration |
|
|
|
|
3,286
|
|
|
Acquisition
integration costs |
|
|
|
|
(
12,695)
|
|
|
Stock-based
compensation |
|
|
|
|
(
34,588) |
|
|
Merger
and acquisition related expenses |
|
|
|
|
(
4,392)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition
related tax adjustment |
|
|
|
|
(
1,293)
|
|
|
Tax
Receivable Agreement liability adjustment |
|
|
|
|
668,886
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring
costs (3)
|
|
|
|
|
(
6,567) |
|
|
Other
|
|
|
|
|
(
1,791)
|
|
|
Income
before income taxes
|
|
|
|
|
617,736
|
|
|
Income
tax expense
|
|
|
|
|
(
756,111) |
|
| Net
loss |
|
|
|
|
$
|
(
138,375
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year
Ended December 31, 2022 |
|
Nucleic Acid
Production |
|
Biologics
Safety Testing |
|
Total
|
| Revenue
|
$
|
813,069
|
|
$
|
69,932
|
|
$
|
883,001
|
| Intersegment
revenues |
7
|
|
—
|
|
7
|
|
813,076
|
|
69,932
|
|
883,008
|
|
Elimination
of intersegment revenues
|
|
|
|
|
(
7) |
|
Total
consolidated revenues |
|
|
|
|
$
|
883,001
|
|
|
|
|
|
|
| Less:
|
|
|
|
|
|
|
Cost
of revenue (1)
|
127,179
|
|
9,100
|
|
|
|
Selling
and marketing (1)
|
15,022
|
|
1,936
|
|
|
|
General
and administrative (1)
|
26,224
|
|
2,822
|
|
|
|
Research
and development (1)
|
6,317
|
|
1,232
|
|
|
|
Other
segment items (2)
|
(
3
) |
|
1
|
|
|
|
Adjusted
EBITDA |
638,337
|
|
54,841
|
|
$
|
693,178
|
|
Reconciliation
of total reportable segments’ adjusted EBITDA to income before income
taxes
|
|
|
|
|
|
| Amortization
|
|
|
|
|
(
24,269) |
|
| Depreciation
|
|
|
|
|
(
7,566
) |
|
| Interest
expense |
|
|
|
|
(
20,414) |
|
| Interest
income |
|
|
|
|
2,338
|
|
| Corporate
costs, net of eliminations |
|
|
|
|
(
55,378) |
|
| Other
adjustments: |
|
|
|
|
|
|
Acquisition
contingent consideration |
|
|
|
|
7,800
|
|
|
Acquisition
integration costs |
|
|
|
|
(
13,362)
|
|
|
Stock-based
compensation |
|
|
|
|
(
18,670) |
|
|
Merger
and acquisition related expenses |
|
|
|
|
(
2,416)
|
|
|
Financing
costs |
|
|
|
|
(
1,078) |
|
|
|
|
|
|
|
|
Acquisition
related tax adjustment |
|
|
|
|
(
349) |
|
|
Tax
Receivable Agreement liability adjustment |
|
|
|
|
(
4,102) |
|
|
Chief
Executive Officer transition costs |
|
|
|
|
(
2,426) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
|
|
|
(
1,814)
|
|
|
Income
before income taxes
|
|
|
|
|
551,472
|
|
|
Income
tax expense
|
|
|
|
|
(
60,809) |
|
|
Net
income
|
|
|
|
|
$
|
490,663
|
|
___________________
(1)Expenses
are adjusted to remove the impact of certain items that management believes do not directly reflect
our core operations, and, therefore, are not included in measuring segment performance.
(2)Other
segment items for each reportable segment include realized and unrealized loss (gain) on foreign
exchange transactions.
(3)For
the years ended December 31, 2024 and 2023, stock-based compensation benefit of $
1.2 million and $
0.1 million,
respectively, related to forfeited stock awards in connection with the restructuring is included on
the stock-based compensation line item.
There
was no intersegment revenue during the year ended December 31, 2024.
During the years ended December 31, 2023 and 2022, intersegment revenue was
immaterial
between the Nucleic Acid Production and Biologics Safety Testing segments. The
intersegment sales and the related gross margin on inventory recorded at the end of the period are
eliminated for consolidation purposes. Internal selling prices for intersegment sales are consistent
with the segment’s normal retail price offered to external parties. There was
no
commission expense recognized for intersegment sales for the years ended
December 31, 2024, 2023 and 2022.
The
Company does not allocate assets to its reportable segments as they are not included in the review
performed by the CODM for purposes of assessing segment performance and allocating resources.
18.
Quarterly
Financial Information (Unaudited)
The
Company identified an error during the year-end financial close process with respect to revenue
recognition associated with a single shipment that resulted in approximately $
3.9
million in revenue being recorded in the final week of the second quarter of 2024
upon shipment when it should have been recorded in the first week of the third quarter of 2024 upon
receipt by the customer.
As
a result, the Company has restated the interim financial statements for the second and third quarters of
2024 associated with the abovementioned shipment. Relevant restated financial information is included in
this Annual Report on Form 10-K in the tables that follow. As part of the restatement, the Company also
recorded other immaterial adjustments to correct the misstatements for the impacted periods. The
unaudited interim financial statements reflect all adjustments which are, in the opinion of management,
necessary for a fair statement of the results for the interim periods presented.
The
effects of the restatement on the condensed consolidated balance sheet as of June 30, 2024 are
summarized in the following table (in thousands, except per share amounts):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June
30, 2024
(Unaudited)
|
|
As
Reported
|
|
Adjustments
|
|
As
Restated
|
| Assets
|
|
|
|
|
|
| Current
assets: |
|
|
|
|
|
|
Cash
and cash equivalents |
$
|
573,171
|
|
|
$
|
—
|
|
|
$
|
573,171
|
|
|
Accounts
receivable, net |
38,651
|
|
|
(
3,909) |
|
|
34,742
|
|
|
Inventory
|
49,294
|
|
|
49
|
|
|
49,343
|
|
|
Prepaid
expenses and other current assets |
17,063
|
|
|
—
|
|
|
17,063
|
|
|
Interest
rate cap |
6,575
|
|
|
—
|
|
|
6,575
|
|
|
Government
funding receivable |
608
|
|
|
—
|
|
|
608
|
|
| Total
current assets |
685,362
|
|
|
(
3,860) |
|
|
681,502
|
|
| Property
and equipment, net |
165,503
|
|
|
—
|
|
|
165,503
|
|
| Goodwill
|
326,029
|
|
|
—
|
|
|
326,029
|
|
| Intangible
assets, net |
207,249
|
|
|
—
|
|
|
207,249
|
|
|
|
|
|
|
|
| Other
assets |
63,465
|
|
|
—
|
|
|
63,465
|
|
| Total
assets |
$
|
1,447,608
|
|
|
$
|
(
3,860
) |
|
|
$
|
1,443,748
|
|
| Liabilities
and stockholders’ equity |
|
|
|
|
|
| Current
liabilities: |
|
|
|
|
|
|
Accounts
payable |
$
|
12,536
|
|
|
$
|
—
|
|
|
$
|
12,536
|
|
|
Accrued
expenses and other current liabilities |
40,719
|
|
|
—
|
|
|
40,719
|
|
|
Deferred
revenue |
2,078
|
|
|
68
|
|
|
2,146
|
|
|
Current
portion of payable to related parties pursuant to the Tax Receivable Agreement
|
7,069
|
|
|
—
|
|
|
7,069
|
|
|
Current
portion of long-term debt |
5,440
|
|
|
—
|
|
|
5,440
|
|
|
Current
portion of finance lease liabilities |
710
|
|
|
—
|
|
|
710
|
|
| Total
current liabilities |
68,552
|
|
|
68
|
|
|
68,620
|
|
| Long-term
debt, less current portion |
517,083
|
|
|
—
|
|
|
517,083
|
|
| Finance
lease liabilities, less current portion |
31,527
|
|
|
—
|
|
|
31,527
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Other
long-term liabilities |
54,032
|
|
|
—
|
|
|
54,032
|
|
| Total
liabilities |
671,194
|
|
|
68
|
|
|
671,262
|
|
|
Commitments
and contingencies
|
|
|
|
|
|
| Stockholders’
equity: |
|
|
|
|
|
|
Class
A common stock, $0.01 par value - 500,000
shares authorized;
141,489
shares issued and outstanding as of June 30, 2024
|
1,415
|
|
|
—
|
|
|
1,415
|
|
|
Class
B common stock, $0.01 par value - 256,856
shares authorized;
110,684
issued and outstanding as of June 30, 2024
|
1,107
|
|
|
—
|
|
|
1,107
|
|
|
Additional
paid-in capital |
168,337
|
|
|
—
|
|
|
168,337
|
|
|
|
|
|
|
|
|
Retained
earnings
|
266,074
|
|
|
(
2,204) |
|
|
263,870
|
|
|
Total
stockholders’ equity attributable to Maravai LifeSciences Holdings, Inc.
|
436,933
|
|
|
(
2,204) |
|
|
434,729
|
|
|
Non-controlling
interest |
339,481
|
|
|
(
1,724) |
|
|
337,757
|
|
| Total
stockholders’ equity |
776,414
|
|
|
(
3,928)
|
|
|
772,486
|
|
| Total
liabilities and stockholders’ equity |
$
|
1,447,608
|
|
|
$
|
(
3,860) |
|
|
$
|
1,443,748
|
|
The
effects of the restatement on the condensed consolidated statements of operations for the three and
six months ended June 30, 2024 are summarized in the following tables (in thousands, except per
share amounts):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three
Months Ended June 30, 2024
(Unaudited)
|
|
As
Reported |
|
Adjustments
|
|
As
Restated |
| Revenue
|
$
|
73,400
|
|
|
$
|
(
3,977)
|
|
|
$
|
69,423
|
|
| Operating
expenses: |
|
|
|
|
|
|
Cost
of revenue |
38,271
|
|
|
311
|
|
|
38,582
|
|
|
Selling,
general and administrative |
40,556
|
|
|
—
|
|
|
40,556
|
|
|
Research
and development |
5,284
|
|
|
(
360
) |
|
|
4,924
|
|
|
Change
in estimated fair value of contingent consideration |
(
1,195)
|
|
|
—
|
|
|
(
1,195)
|
|
|
|
|
|
|
|
|
Restructuring
|
(
4)
|
|
|
—
|
|
|
(
4)
|
|
| Total
operating expenses |
82,912
|
|
|
(
49)
|
|
|
82,863
|
|
|
Loss
from operations
|
(
9,512) |
|
|
(
3,928) |
|
|
(
13,440) |
|
| Other
income (expense): |
|
|
|
|
|
|
Interest
expense |
(
11,939) |
|
|
—
|
|
|
(
11,939) |
|
|
Interest
income |
7,086
|
|
|
—
|
|
|
7,086
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
expense
|
(
2,562) |
|
|
—
|
|
|
(
2,562) |
|
|
Loss
before income taxes
|
(
16,927)
|
|
|
(
3,928)
|
|
|
(
20,855)
|
|
|
Income
tax benefit
|
(
2,435) |
|
|
—
|
|
|
(
2,435) |
|
|
Net
loss
|
(
14,492
) |
|
|
(
3,928
) |
|
|
(
18,420
) |
|
|
Net
loss attributable to non-controlling interests
|
(
6,907)
|
|
|
(
1,724)
|
|
|
(
8,631)
|
|
|
Net
loss attributable to Maravai LifeSciences Holdings, Inc.
|
$
|
(
7,585) |
|
|
$
|
(
2,204) |
|
|
$
|
(
9,789) |
|
|
|
|
|
|
|
|
Net
loss per Class A common share attributable to Maravai LifeSciences Holdings, Inc.,
basic and diluted
|
$
|
(
0.05
) |
|
|
$
|
(
0.02
) |
|
|
$
|
(
0.07
) |
|
|
Weighted
average number of Class A common shares outstanding, basic and diluted
|
135,842
|
|
|
—
|
|
|
135,842
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six
Months Ended June 30, 2024
(Unaudited)
|
|
As
Reported |
|
Adjustments
|
|
As
Restated |
| Revenue
|
$
|
137,579
|
|
|
$
|
(
3,977)
|
|
|
$
|
133,602
|
|
| Operating
expenses: |
|
|
|
|
|
|
Cost
of revenue |
76,606
|
|
|
311
|
|
|
76,917
|
|
|
Selling,
general and administrative |
81,441
|
|
|
—
|
|
|
81,441
|
|
|
Research
and development |
10,316
|
|
|
(
360
) |
|
|
9,956
|
|
|
Change
in estimated fair value of contingent consideration |
(
1,195)
|
|
|
—
|
|
|
(
1,195)
|
|
|
|
|
|
|
|
|
Restructuring
|
(
1,216) |
|
|
—
|
|
|
(
1,216) |
|
| Total
operating expenses |
165,952
|
|
|
(
49)
|
|
|
165,903
|
|
|
Loss
from operations
|
(
28,373) |
|
|
(
3,928) |
|
|
(
32,301) |
|
| Other
income (expense): |
|
|
|
|
|
|
Interest
expense |
(
22,803) |
|
|
—
|
|
|
(
22,803) |
|
|
Interest
income |
14,296
|
|
|
—
|
|
|
14,296
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
expense |
(
2,456) |
|
|
—
|
|
|
(
2,456) |
|
|
Loss
before income taxes
|
(
39,336)
|
|
|
(
3,928)
|
|
|
(
43,264)
|
|
|
Income
tax benefit
|
(
2,164) |
|
|
—
|
|
|
(
2,164) |
|
|
Net
loss
|
(
37,172
) |
|
|
(
3,928
) |
|
|
(
41,100
) |
|
|
Net
loss attributable to non-controlling interests
|
(
17,509)
|
|
|
(
1,724)
|
|
|
(
19,233)
|
|
|
Net
loss attributable to Maravai LifeSciences Holdings, Inc.
|
$
|
(
19,663) |
|
|
$
|
(
2,204) |
|
|
$
|
(
21,867) |
|
|
|
|
|
|
|
|
Net
loss per Class A common share attributable to Maravai LifeSciences Holdings, Inc.,
basic and diluted
|
$
|
(
0.15
) |
|
|
$
|
(
0.01
) |
|
|
$
|
(
0.16
) |
|
|
Weighted
average number of Class A common shares outstanding, basic and diluted
|
134,088
|
|
|
—
|
|
|
134,088
|
|
The
effects of the restatement on certain line items of the condensed consolidated statement of cash
flows for the six months ended June 30, 2024 are summarized in the following table (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six
Months Ended June 30, 2024
(Unaudited)
|
|
As
Reported |
|
Adjustments
|
|
As
Restated |
| Operating
activities: |
|
|
|
|
|
|
Net
loss
|
$
|
(
37,172
) |
|
|
$
|
(
3,928
) |
|
|
$
|
(
41,100
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Changes
in operating assets and liabilities, net of acquisitions: |
|
|
|
|
|
|
Accounts
receivable |
15,862
|
|
|
3,909
|
|
|
19,771
|
|
|
Inventory
|
1,571
|
|
|
(
49
) |
|
|
1,522
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred
revenue |
(
1,282)
|
|
|
68
|
|
|
(
1,214)
|
|
|
|
|
|
|
|
|
Total
|
$
|
(
21,021)
|
|
|
$
|
—
|
|
|
$
|
(
21,021)
|
|
There
was no impact on net cash provided by operating activities or within any line items within investing and
financing activities.
The
effects of the restatement on the condensed consolidated balance sheet as of September 30, 2024 are
summarized in the following table (in thousands, except per share amounts):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September
30, 2024
(Unaudited)
|
|
As
Reported |
|
Adjustments
|
|
As
Restated |
| Assets
|
|
|
|
|
|
| Current
assets: |
|
|
|
|
|
|
Cash
and cash equivalents |
$
|
578,157
|
|
|
$
|
—
|
|
|
$
|
578,157
|
|
|
Accounts
receivable, net |
28,873
|
|
|
(
85
) |
|
|
28,788
|
|
|
Inventory
|
50,409
|
|
|
125
|
|
|
50,534
|
|
|
Prepaid
expenses and other current assets |
21,659
|
|
|
—
|
|
|
21,659
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total
current assets |
679,098
|
|
|
40
|
|
|
679,138
|
|
| Property
and equipment, net |
164,555
|
|
|
—
|
|
|
164,555
|
|
| Goodwill
|
171,790
|
|
|
—
|
|
|
171,790
|
|
| Intangible
assets, net |
201,858
|
|
|
—
|
|
|
201,858
|
|
|
|
|
|
|
|
| Other
assets |
60,914
|
|
|
—
|
|
|
60,914
|
|
| Total
assets |
$
|
1,278,215
|
|
|
$
|
40
|
|
|
$
|
1,278,255
|
|
| Liabilities
and stockholders’ equity |
|
|
|
|
|
| Current
liabilities: |
|
|
|
|
|
|
Accounts
payable |
$
|
9,494
|
|
|
$
|
—
|
|
|
$
|
9,494
|
|
|
Accrued
expenses and other current liabilities |
38,498
|
|
|
400
|
|
|
38,898
|
|
|
Deferred
revenue |
1,834
|
|
|
68
|
|
|
1,902
|
|
|
Current
portion of payable to related parties pursuant to the Tax Receivable Agreement
|
7,225
|
|
|
—
|
|
|
7,225
|
|
|
Current
portion of long-term debt |
5,440
|
|
|
—
|
|
|
5,440
|
|
|
Current
portion of finance lease liabilities |
750
|
|
|
—
|
|
|
750
|
|
| Total
current liabilities |
63,241
|
|
|
468
|
|
|
63,709
|
|
| Long-term
debt, less current portion |
516,283
|
|
|
—
|
|
|
516,283
|
|
| Finance
lease liabilities, less current portion |
31,327
|
|
|
—
|
|
|
31,327
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Other
long-term liabilities |
54,237
|
|
|
—
|
|
|
54,237
|
|
| Total
liabilities |
665,088
|
|
|
468
|
|
|
665,556
|
|
|
Commitments
and contingencies
|
|
|
|
|
|
| Stockholders’
equity: |
|
|
|
|
|
|
Class
A common stock, $0.01 par value - 500,000
shares authorized;
141,589
shares issued and outstanding as of September 30, 2024
|
1,416
|
|
|
—
|
|
|
1,416
|
|
|
Class
B common stock, $0.01 par value - 256,856
shares authorized;
110,684
issued and outstanding as of September 30, 2024
|
1,107
|
|
|
—
|
|
|
1,107
|
|
|
Additional
paid-in capital |
175,581
|
|
|
(
2
) |
|
|
175,579
|
|
|
|
|
|
|
|
|
Retained
earnings |
167,036
|
|
|
(
240
) |
|
|
166,796
|
|
|
Total
stockholders’ equity attributable to Maravai LifeSciences Holdings, Inc.
|
345,140
|
|
|
(
242)
|
|
|
344,898
|
|
|
Non-controlling
interest |
267,987
|
|
|
(
186)
|
|
|
267,801
|
|
| Total
stockholders’ equity |
613,127
|
|
|
(
428) |
|
|
612,699
|
|
| Total
liabilities and stockholders’ equity |
$
|
1,278,215
|
|
|
$
|
40
|
|
|
$
|
1,278,255
|
|
The
effects of the restatement on the condensed consolidated statements of operations for the three and
nine months ended September 30, 2024 are summarized in the following tables (in thousands, except
per share amounts):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three
Months Ended September 30, 2024
(Unaudited)
|
|
As
Reported |
|
Adjustments
|
|
As
Restated |
| Revenue
|
$
|
65,200
|
|
|
$
|
3,825
|
|
|
$
|
69,025
|
|
| Operating
expenses: |
|
|
|
|
|
|
Cost
of revenue |
36,826
|
|
|
(
35) |
|
|
36,791
|
|
|
Selling,
general and administrative |
39,087
|
|
|
—
|
|
|
39,087
|
|
|
Research
and development |
4,344
|
|
|
360
|
|
|
4,704
|
|
|
Change
in estimated fair value of contingent consideration |
(
178) |
|
|
—
|
|
|
(
178) |
|
|
Goodwill
impairment
|
154,239
|
|
|
—
|
|
|
154,239
|
|
|
Restructuring
|
(
4)
|
|
|
—
|
|
|
(
4)
|
|
| Total
operating expenses |
234,314
|
|
|
325
|
|
|
234,639
|
|
|
Loss
from operations
|
(
169,114) |
|
|
3,500
|
|
|
(
165,614) |
|
| Other
income (expense): |
|
|
|
|
|
|
Interest
expense |
(
13,634) |
|
|
—
|
|
|
(
13,634) |
|
|
Interest
income |
7,071
|
|
|
—
|
|
|
7,071
|
|
|
|
|
|
|
|
|
Change
in payable to related parties pursuant to the Tax Receivable Agreement |
(
39) |
|
|
—
|
|
|
(
39) |
|
|
Other
expense
|
72
|
|
|
—
|
|
|
72
|
|
|
Loss
before income taxes
|
(
175,644)
|
|
|
3,500
|
|
|
(
172,144)
|
|
|
Income
tax benefit
|
311
|
|
|
—
|
|
|
311
|
|
|
Net
loss
|
(
175,955
) |
|
|
3,500
|
|
|
(
172,455
) |
|
|
Net
loss attributable to non-controlling interests
|
(
76,917)
|
|
|
1,536
|
|
|
(
75,381)
|
|
|
Net
loss attributable to Maravai LifeSciences Holdings, Inc.
|
$
|
(
99,038) |
|
|
$
|
1,964
|
|
|
$
|
(
97,074) |
|
|
|
|
|
|
|
|
Net
loss per Class A common share attributable to Maravai LifeSciences Holdings, Inc.,
basic and diluted
|
$
|
(
0.70
) |
|
|
$
|
0.02
|
|
|
$
|
(
0.68
) |
|
|
Weighted
average number of Class A common shares outstanding, basic and diluted
|
141,555
|
|
|
—
|
|
|
141,555
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine
Months Ended September 30, 2024
(Unaudited)
|
|
As
Reported |
|
Adjustments
|
|
As
Restated |
| Revenue
|
$
|
202,779
|
|
|
$
|
(
152) |
|
|
$
|
202,627
|
|
| Operating
expenses: |
|
|
|
|
|
|
Cost
of revenue |
113,432
|
|
|
276
|
|
|
113,708
|
|
|
Selling,
general and administrative |
120,528
|
|
|
—
|
|
|
120,528
|
|
|
Research
and development |
14,660
|
|
|
—
|
|
|
14,660
|
|
|
Change
in estimated fair value of contingent consideration |
(
1,373)
|
|
|
—
|
|
|
(
1,373)
|
|
|
Goodwill
impairment
|
154,239
|
|
|
—
|
|
|
154,239
|
|
|
Restructuring
|
(
1,220) |
|
|
—
|
|
|
(
1,220) |
|
| Total
operating expenses |
400,266
|
|
|
276
|
|
|
400,542
|
|
|
Loss
from operations
|
(
197,487) |
|
|
(
428
) |
|
|
(
197,915) |
|
| Other
income (expense): |
|
|
|
|
|
|
Interest
expense |
(
36,437) |
|
|
—
|
|
|
(
36,437) |
|
|
Interest
income |
21,367
|
|
|
—
|
|
|
21,367
|
|
|
|
|
|
|
|
|
Change
in payable to related parties pursuant to the Tax Receivable Agreement |
(
39) |
|
|
—
|
|
|
(
39) |
|
|
Other
expense
|
(
2,384) |
|
|
—
|
|
|
(
2,384) |
|
|
Loss
before income taxes
|
(
214,980)
|
|
|
(
428) |
|
|
(
215,408)
|
|
|
Income
tax benefit
|
(
1,853) |
|
|
—
|
|
|
(
1,853) |
|
|
Net
loss
|
(
213,127
) |
|
|
(
428) |
|
|
(
213,555
) |
|
|
Net
loss attributable to non-controlling interests
|
(
94,426)
|
|
|
(
188) |
|
|
(
94,614)
|
|
|
Net
loss attributable to Maravai LifeSciences Holdings, Inc.
|
$
|
(
118,701) |
|
|
$
|
(
240) |
|
|
$
|
(
118,941) |
|
|
|
|
|
|
|
|
Net
loss per Class A common share attributable to Maravai LifeSciences Holdings, Inc.,
basic and diluted
|
$
|
(
0.87
) |
|
|
$
|
—
|
|
|
$
|
(
0.87
) |
|
|
Weighted
average number of Class A common shares outstanding, basic and diluted
|
136,595
|
|
|
—
|
|
|
136,595
|
|
The
effects of the restatement on certain line items of the condensed consolidated statement of cash
flows for the nine months ended September 30, 2024 are summarized in the following table (in
thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine
Months Ended September 30, 2024
(Unaudited)
|
|
As
Reported |
|
Adjustments
|
|
As
Restated |
| Operating
activities: |
|
|
|
|
|
|
Net
loss
|
$
|
(
213,127
) |
|
|
$
|
(
428) |
|
|
$
|
(
213,555
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Changes
in operating assets and liabilities, net of acquisitions: |
|
|
|
|
—
|
|
|
Accounts
receivable |
25,704
|
|
|
85
|
|
|
25,789
|
|
|
Inventory
|
50
|
|
|
(
125
) |
|
|
(
75
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accrued
expenses and other current liabilities |
(
21,118) |
|
|
400
|
|
|
(
20,718) |
|
|
Deferred
revenue |
(
1,526)
|
|
|
68
|
|
|
(
1,458)
|
|
|
|
|
|
|
|
|
Total
|
$
|
(
210,017)
|
|
|
$
|
—
|
|
|
$
|
(
210,017)
|
|
There
was no impact on net cash provided by operating activities or within any line items within investing and
financing activities.
19.
Subsequent
Events
Acquisition
of Assets and Intellectual Property from Molecular Assemblies
In
January 2025, the Company acquired assets and intellectual property from Molecular Assemblies, expanding
TriLink’s ability to enable customers to develop next-generation mRNA and clustered regularly
interspaced short palindromic repeats nucleic acid-based therapies. The total consideration for this
acquisition was a purchase price of $11.5
million, subject to customary post-closing adjustments.
Acquisition
of Officinae Bio
In
February 2025, the Company completed the acquisition of the DNA and RNA business of Officinae Bio
(“Officinae”), a privately held technology company with a proprietary digital platform
designed with artificial intelligence and machine learning capabilities to support the biological design
of therapeutics. The total consideration to acquire Officinae consisted of a base cash provisional
purchase price of $10.0 million,
subject to customary post-closing adjustments, and potential contingent consideration payments of up to
$35.0 million, with $5.0 million of such contingent consideration payable in cash
upon the achievement of a certain milestone and up to an additional $30.0 million payable in a mix of cash and shares of the
Company’s Class A common stock upon the achievement of certain milestones.
Item
9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item
9A. Controls and Procedures
Evaluation
of Disclosure Controls and Procedures
Under
the supervision and with the participation of our management, including our Chief Executive Officer and
Chief Financial Officer, we evaluated the effectiveness of the design and operation of our disclosure
controls and procedures pursuant to Rule 13a-15(e) and 15(d)-15(e) under the Securities Exchange Act of
1934, as amended (the “Exchange Act”) as of the end of the period covered by this report. Our
disclosure controls and procedures are designed to ensure that information required to be disclosed in the
reports that are filed or submitted under the Exchange Act is accumulated and communicated to management,
including the Chief Executive Officer and Chief Financial Officer, to allow for timely decisions regarding
required disclosures. In designing and evaluating the disclosure controls and procedures, management
recognized that any controls and procedures, no matter how well designed and operated, can provide only
reasonable assurance of achieving the desired control objectives, as ours are designed to do, and management
necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and
procedures. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded
that, as of December 31, 2024, the Company’s disclosure controls and procedures were not
effective at a reasonable assurance level due to the material weaknesses in internal control over financial
reporting described below. A material weakness is a deficiency, or a combination of deficiencies, in
internal control over financial reporting, such that there is a reasonable possibility that a material
misstatement of our annual or interim financial statements will not be prevented or detected on a timely
basis.
Management’s
Report on Internal Control over Financial Reporting
Our
management is responsible for establishing and maintaining adequate internal control over financial
reporting, as such terms are defined in Exchange Act Rules 13a-15(f) and 15(d)-15(f). Our internal control
over financial reporting is a process designed to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with
accounting principles generally accepted in the United States. Because of its inherent limitations, internal
control over financial reporting may not prevent or detect misstatements. Therefore, even those systems
determined to be effective can provide only reasonable assurance of achieving their control objectives.
Our
management assessed the effectiveness of our internal control over financial reporting as of
December 31, 2024. Based on the results of this evaluation, our management concluded that our internal
control over financial reporting was ineffective as of December 31, 2024, because we identified the
following material weaknesses:
•Revenue
and accounts receivable:
Management did not design and operate effective controls over the Company’s revenue process.
Specifically, we did not design and maintain effective controls over the timing of when the Company has
transferred control of goods to its customers at period end, segregation of duties related to customer
purchase order information entered into the Company’s IT systems, accounting for customer product
revenue, and the authorization and documentation of pricing approvals. The material weakness is an
aggregation of these matters.
•Goodwill
impairment:
Management did not operate effective controls over the key inputs and assumptions that were utilized to
determine the fair value of reporting units in the Company’s quantitative goodwill impairment
assessment as of December 31, 2024.
These
material weaknesses, individually or in the aggregate, could result in misstatements of accounts or
disclosures in the consolidated financial statements that would not be prevented or detected on a timely
basis. Accordingly, management has concluded that these control deficiencies constitute material weaknesses.
In making this assessment, we used the criteria set forth by the Committee of Sponsoring Organizations of
the Treadway Commission (COSO) in Internal Control - Integrated Framework (2013 Framework). Based on its
assessment, management concluded that, as of December 31, 2024, the Company’s internal control
over financial reporting was not effective.
Ernst
& Young LLP, an independent registered public accounting firm has issued an auditors’ report on
our internal control over financial reporting as of December 31, 2024, which is included elsewhere in
this Audit Report on Form 10-K.
Changes
in Internal Control over Financial Reporting
Except
for the material weaknesses noted above, there have been no changes in our internal control over financial
reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, during the three
months ended December 31, 2024 that have materially affected, or are reasonably likely to materially
affect, our internal control over financial reporting.
Remediation
Plan for Material Weakness
With
respect to the material weaknesses above, management, under the oversight of the Audit Committee, is in the
process of designing appropriate controls as well as implementing measures to ensure appropriate operation
of existing controls to address these material weaknesses. While we have taken steps to implement our
remediation plan, the material weaknesses will not be considered remediated until the enhanced controls
operate for a sufficient period of time and management has concluded, through testing, that the related
controls are effective. The Company will monitor the effectiveness of its remediation plan and refine its
remediation plan as appropriate. Remediation to address the material weaknesses noted above,
includes:
•Revenue
and accounts receivable
-
–Remediating
the design and operation of existing controls related to the revenue process.
–Designing
and implementing new controls to sufficiently document evidence of pricing authorization and approvals.
–Reviewing
order entry data input into IT systems to ensure accuracy.
–Reviewing
shipping terms as a factor in determining the timing of when control of goods is transferred to customers at
period end.
–Monitoring
work order activity related to custom product manufacturing.
•Goodwill
impairment
- enhancing the operation of certain management review controls over key inputs and assumptions, including
projected financial information, by refining the precision by which the controls operate and retaining
sufficient evidence of the review over key inputs and assumptions included in the quantitative goodwill
impairment analysis.
Further,
we plan to continue to provide relevant training to control owners to ensure they understand the importance
of the documentation that supports the effective operation of our control activities, including evidence
over the completeness and accuracy of information used in the controls.
When
fully implemented and operational, we believe the measures described above will remediate the control
deficiencies that have led to these material weaknesses.
Report
of Independent Registered Public Accounting Firm
To
the Shareholders and the Board of Directors of Maravai LifeSciences Holdings, Inc.
Opinion
on Internal Control Over Financial Reporting
We
have audited Maravai LifeSciences Holdings, Inc.’s internal control over financial reporting as of
December 31, 2024, based on criteria established in Internal Control—Integrated Framework issued
by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO
criteria). In our opinion, because of the effect of the material weaknesses described below on the
achievement of the objectives of the control criteria, Maravai LifeSciences Holdings, Inc. (the Company) has
not maintained effective internal control over financial reporting as of December 31, 2024, based on
the COSO criteria.
A
material weakness is a deficiency, or combination of deficiencies, in internal control over financial
reporting, such that there is a reasonable possibility that a material misstatement of the company’s
annual or interim financial statements will not be prevented or detected on a timely basis. The following
material weaknesses have been identified and included in management’s assessment. Management
identified material weaknesses in controls related to revenue and accounts receivable as well as goodwill
impairment.
We
also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2024 and 2023, the
related consolidated statements of operations, comprehensive (loss) income, changes in stockholders’
equity and cash flows for each of the three years in the period ended December 31, 2024, and the
related notes. These material weaknesses were considered in determining the nature, timing and extent of
audit tests applied in our audit of the 2024 consolidated financial statements, and this report does not
affect our report dated March 18, 2025, which expressed an unqualified opinion thereon.
Basis
for Opinion
The
Company’s management is responsible for maintaining effective internal control over financial
reporting and for its assessment of the effectiveness of internal control over financial reporting included
in the accompanying Management’s Report on Internal Control over Financial Reporting. Our
responsibility is to express an opinion on the Company’s internal control over financial reporting
based on our audit. We are a public accounting firm registered with the PCAOB and are required to be
independent with respect to the Company in accordance with the U.S. federal securities laws and the
applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We
conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether effective internal control over financial
reporting was maintained in all material respects.
Our
audit included obtaining an understanding of internal control over financial reporting, assessing the risk
that a material weakness exists, testing and evaluating the design and operating effectiveness of internal
control based on the assessed risk, and performing such other procedures as we considered necessary in the
circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition
and Limitations of Internal Control Over Financial Reporting
A
company’s internal control over financial reporting is a process designed to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles. A company’s internal
control over financial reporting includes those policies and procedures that (1) pertain to the maintenance
of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of
the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted accounting principles, and
that receipts and expenditures of the company are being made only in accordance with authorizations of
management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a
material effect on the financial statements.
Because
of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the
risk that controls may become inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.
/s/
Ernst & Young LLP
San
Mateo, California
March 18,
2025
Item
9B. Other Information
Insider
Trading Arrangements
None
of the Company’s directors or officers (as defined in Section 16 of the Exchange Act)
adopted
or
terminated
a “Rule 10b5-1 trading arrangement” or a “non-Rule 10b5-1 trading
arrangement” (each as defined in Item 408(a) and (c) of Regulation S-K) during the Company’s
fiscal quarter ended December 31, 2024.
Item
9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not
applicable.
Part
III.
Item
10. Directors, Executive Officers and Corporate Governance
The
information required by this Item is incorporated by reference to the Company’s definitive proxy
statement (the “2025 Proxy Statement”) to be filed with the SEC no later than 120 days after the
end of our fiscal year ended December 31, 2024 in connection with the solicitation of proxies for the
Company’s 2025 annual meeting of stockholders.
Insider
Trading Policy
The
Company has adopted an Insider Trading Policy that restricts
transactions in the Company’s securities by its directors, officers, employees and certain other
covered persons while such persons are in the possession of material non-public information. The Insider
Trading Policy is designed to promote compliance with foreign, federal and state insider trading laws, SEC
rules and regulations and NASDAQ listing standards. A copy of the Insider Trading Policy is filed as Exhibit
19.1 to this Annual Report on Form 10-K.
Item
11. Executive Compensation
The
information required by this Item is incorporated by reference to the 2025 Proxy Statement.
Item
12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The
information required by this Item is incorporated by reference to the 2025 Proxy Statement.
Item
13. Certain Relationships and Related Transactions and Director Independence
The
information required by this Item is incorporated by reference to the 2025 Proxy Statement.
Item
14. Principal Accounting Fees and Services
The
information required by this Item is incorporated by reference to the 2025 Proxy Statement.
Part
IV.
Item
15. Exhibits and Financial Statement Schedules
(a)
The following documents are filed as a part of this report:
(1) Consolidated
Financial Statements (included in Item 8):
(2) Financial
Statement Schedules
All
schedules have been omitted because they are not applicable or not required, or because the required
information is included either in the consolidated financial statements or in the notes thereto.
(3) Exhibits
|
|
|
|
|
|
|
|
|
| Exhibit Number
|
|
Description
|
|
|
|
| 2.1§
|
|
Agreement
and Plan of Merger, dated as of August 5, 2021, among Maravai Life Sciences, Inc.,
Voyager Group Holdings, Inc., Maravai LifeSciences Holdings, Inc., and Maravai
Intermediate Holdings, LLC (incorporated by reference to Exhibit 2.1 to Maravai
LifeSciences Holdings, Inc.’s Form 8-K filed on August 10, 2021).
|
|
|
|
| 2.2§
|
|
Amendment
No. 1, dated as of September 2, 2021, to the Agreement and Plan of Merger, dated as of
August 5, 2021, among Maravai Life Sciences, Inc., Voyager Group Holdings, Inc., Maravai
LifeSciences Holdings, Inc., and Maravai Intermediate Holdings, LLC (incorporated by
reference to Exhibit 2.1 to Maravai LifeSciences Holdings, Inc.’s Form 8-K filed
on September 3, 2021).
|
|
|
|
| 2.3
|
|
Letter
Agreement, dated November 24, 2021, amending the Agreement and Plan of Merger, dated as
of August 5, 2021, among Maravai Life Sciences, Inc., Voyager Group Holdings, Inc.,
Maravai LifeSciences Holdings, Inc., and Maravai Intermediate Holdings, LLC
(incorporated by reference to Exhibit 2.3 to Maravai LifeSciences Holdings, Inc.'s Form
10-K filed on March 1, 2022).
|
|
|
|
|
2.4
|
|
Amendment
No. 2, dated as of August 30, 2022, to the Agreement and Plan of Merger, dated as of
August 5, 2021, among Maravai Life Sciences, LLC (f/k/a Maravai Life Sciences, Inc.),
Voyager Group Holdings, Inc., Vector Laboratories, Inc., Maravai LifeSciences Holdings,
Inc., and Maravai Intermediate Holdings, LLC (incorporated by reference to Exhibit 2.1
to Maravai LifeSciences Holdings, Inc.’s Form 10-Q filed on November 4,
2022).
|
|
|
|
| 3.1
|
|
|
|
|
|
| 3.2
|
|
|
|
|
|
| 4.1
|
|
|
|
|
|
| 4.2
|
|
|
|
|
|
| 10.1+
|
|
|
|
|
|
|
10.2+§
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Exhibit Number
|
|
Description
|
|
10.3+§
|
|
|
|
|
|
|
10.4+§
|
|
|
|
|
|
|
10.5
|
|
|
|
|
|
|
10.6
|
|
|
|
|
|
|
10.7
|
|
|
|
|
|
|
10.8+
|
|
|
|
|
|
|
10.9
|
|
|
|
|
|
|
10.10§
|
|
|
|
|
|
|
10.11§
|
|
|
|
|
|
|
10.12§
|
|
|
|
|
|
|
10.13§
|
|
|
|
|
|
|
10.14§
|
|
|
|
|
|
|
10.15
|
|
|
|
|
|
|
10.16
|
|
|
|
|
|
|
10.17§
|
|
|
|
|
|
|
10.18
|
|
|
|
|
|
|
10.19§
|
|
Credit
Agreement, dated as of October 19, 2020, among Maravai Intermediate Holdings, LLC,
Cygnus Technologies, LLC, TriLink
Biotechnologies, LLC, Vector Laboratories, Inc., Maravai Topco Holdings, LLC and Morgan
Stanley Senior Funding, Inc. (incorporated by reference to Exhibit 10.24 to Maravai
LifeSciences Holdings, Inc.’s Form S-1 filed on October 29, 2020).
|
|
|
|
|
10.20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Exhibit Number
|
|
Description
|
|
10.21
|
|
Second
Amendment to Credit Agreement, dated as of January 19, 2022, among Maravai Intermediate
Holdings, LLC, Cygnus Technologies, LLC, TriLink
Biotechnologies, LLC, Maravai Topco Holdings, LLC and Morgan Stanley Senior Funding,
Inc. (incorporated by reference to Exhibit 10.1 to Maravai LifeSciences Holdings,
Inc.’s Form 8-K filed on January 20, 2022).
|
|
|
|
|
10.22
|
|
Third
Amendment to Credit Agreement, dated September 10, 2024, among Maravai Intermediate
Holdings, LLC, Cygnus Technologies, LLC, TriLink Biotechnologies, LLC, Maravai Topco
Holdings, LLC, Morgan Stanley Senior Funding, Inc. and the other lenders parties thereto
(incorporated by reference to Exhibit 10.1 to Maravai LifeSciences Holdings,
Inc.’s Form 8-K filed on September 12, 2024).
|
|
|
|
|
10.23+§
|
|
|
|
|
|
|
10.24+
|
|
Amendment
No.1, effective as of July 27, 2023, to the Amended and Restated Employment Agreement of
Carl W. Hull, dated May 8, 2023, among Maravai LifeSciences Holdings, Inc., Maravai
Intermediate Holdings, LLC and Carl W. Hull (incorporated by reference to Exhibit 10.24
to Maravai LifeSciences Holdings, Inc.’s Form 10-K filed on February 29,
2024).
|
|
|
|
|
10.25+§
|
|
|
|
|
|
|
10.26+§
|
|
|
|
|
|
|
10.27+§
|
|
Amended
and Restated Employment Agreement of William “Trey” Martin, III, effective
as of May 8, 2023, among Maravai LifeSciences Holdings, Inc., Maravai Intermediate
Holdings, LLC and William “Trey” Martin, III (incorporated by reference to
Exhibit 10.3 to Maravai LifeSciences Holdings, Inc.’s Form 10-Q filed on May 9,
2023).
|
|
|
|
|
10.28+§
|
|
Amended
and Restated Employment Agreement of Peter Leddy, Ph.D., effective as of May 8, 2023,
among Maravai LifeSciences Holdings, Inc., Maravai Intermediate Holdings, LLC and Peter
Leddy, Ph.D. (incorporated by reference to Exhibit 10.5 to Maravai LifeSciences
Holdings, Inc.’s
Form 10-Q filed on May 9, 2023).
|
|
|
|
|
10.29+
|
|
|
|
|
|
|
10.30+
|
|
|
|
|
|
|
10.31+
|
|
|
|
|
|
|
10.32+
|
|
|
|
|
|
|
10.33+
|
|
|
|
|
|
|
10.34+
|
|
|
|
|
|
|
10.35+
|
|
|
|
|
|
|
10.36+
|
|
|
|
|
|
|
10.37+
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Exhibit Number
|
|
Description
|
|
10.38+
|
|
|
|
|
|
|
10.39+
|
|
|
|
|
|
|
10.40+
|
|
|
|
|
|
|
10.41+
|
|
|
|
|
|
|
10.42+§
|
|
|
|
|
|
|
19.1
|
|
|
|
|
|
| 21.1
|
|
|
|
|
|
| 23.1
|
|
|
|
|
|
| 31.1
|
|
|
|
|
|
| 31.2
|
|
|
|
|
|
| 32.1*
|
|
|
|
|
|
| 32.2*
|
|
|
|
|
|
|
97.1
|
|
|
|
|
|
| 101.INS
|
|
XBRL
Instance Document - the instance document does not appear in the Interactive Data File because
its XBRL tags are embedded within the Inline XBRL document. |
|
|
|
| 101.SCH
|
|
XBRL
Taxonomy Extension Schema Document. |
|
|
|
| 101.CAL
|
|
XBRL
Taxonomy Extension Calculation Linkbase Document. |
|
|
|
| 101.DEF
|
|
XBRL
Extension Definition Linkbase Document. |
|
|
|
| 101.LAB
|
|
XBRL
Taxonomy Label Linkbase Document. |
|
|
|
| 101.PRE
|
|
XBRL
Taxonomy Extension Presentation Linkbase Document. |
|
|
|
| 104
|
|
Cover
Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
_______________
|
|
|
|
|
|
| *
|
The
certifications furnished as Exhibit 32.1 and 32.2 hereto are deemed to accompany this Annual
Report on Form 10-K and will not be deemed “filed” for purposes of Section 18 of
the Exchange Act, or otherwise subject to the liabilities of that section, nor shall it be
deemed incorporated by reference in any filing under the Securities Act or the Exchange Act,
except as expressly set forth by specific reference in such filing.
|
| +
|
Indicates
a management contract or compensatory plan or agreement. |
| §
|
Exhibits
and schedules have been omitted pursuant to Item 601(a)(5) of Regulation S-K and will be
provided on a supplemental basis to the SEC upon request.
|
(ii)Financial
statement schedules
No
financial statement schedules are provided because the information called for is not applicable or is shown
in the financial statements or notes.
Item
16. Form 10-K Summary
None.
SIGNATURES
Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly
caused this report on to be signed on its behalf by the undersigned, thereunto duly authorized.
|
|
|
|
|
|
|
|
|
|
|
|
|
Maravai
LifeSciences Holdings, Inc. |
|
|
|
|
By:
|
|
/s/
William E. Martin, III
|
|
Name:
|
|
William
E. Martin, III
|
|
Title:
|
|
Chief
Executive Officer
|
Date:
March 18, 2025
***
Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the dates indicated.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
|
|
Chief
Executive Officer and Director (Principal Executive Officer)
|
|
March 18,
2025
|
|
/s/
William E. Martin, III
|
|
|
|
William
E. Martin, III
|
|
|
|
|
|
|
|
|
/s/
Kevin Herde
|
|
Chief
Financial Officer (Principal Financial and Accounting Officer) |
|
March 18,
2025
|
|
Kevin
Herde
|
|
|
|
|
|
|
|
|
/s/
Robert Andrew Eckert
|
|
Chairman
of the Board
|
|
March 18,
2025
|
|
Robert
Andrew Eckert
|
|
|
|
|
|
|
|
|
/s/
Sean Cunningham
|
|
Director
|
|
March 18,
2025
|
|
Sean
Cunningham
|
|
|
|
|
|
|
|
|
/s/
Benjamin Daverman
|
|
Director
|
|
March 18,
2025
|
|
Benjamin
Daverman
|
|
|
|
|
|
|
|
|
/s/
John DeFord
|
|
Director
|
|
March 18,
2025
|
|
John
DeFord, Ph.D.
|
|
|
|
|
|
|
|
|
/s/
Susannah Gray
|
|
Director
|
|
March 18,
2025
|
|
Susannah
Gray
|
|
|
|
|
|
|
|
|
/s/
Jessica Hopfield
|
|
Director
|
|
March 18,
2025
|
|
Jessica
Hopfield, Ph.D.
|
|
|
|
|
|
|
|
|
/s/
Gregory T. Lucier
|
|
Director
|
|
March 18,
2025
|
|
Gregory
T. Lucier
|
|
|
|
|
|
|
|
|
/s/
Luke Marker
|
|
Director
|
|
March 18,
2025
|
|
Luke
Marker
|
|
|
|
|
|
|
|
|
/s/
Constantine Mihas
|
|
Director
|
|
March 18,
2025
|
|
Constantine
Mihas
|
|
|
|
|
|
|
|
|
/s/
Murali K. Prahalad
|
|
Director
|
|
March 18,
2025
|
|
Murali
K. Prahalad, Ph.D.
|
|
|